<PAGE>
As filed with the Securities and Exchange Commission on May 15, 1998
Registration Nos. 333-________
333-_________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
AMERICAN MOBILE SATELLITE CORPORATION
AMSC ACQUISITION COMPANY, INC.
(Exact name of registrant
as specified in charter)
Delaware #4899 93-0976127
Delaware #4899 54-1876634
(State or other Jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification No.)
organization) Code Number)
10802 Parkridge Blvd.
Reston, Virginia 20191-5416
(703) 758-6000
(Address, including zip code,
and telephone number, including area code,
of registrant's principal executive offices)
<PAGE>
ADDITIONAL REGISTRANTS
Name of Jurisdiction of Primary IRS Address and
Registrant Organization Standard Employer Telephone
Number Industrial Indentifi-
Classification cation
Number Number
- --------------------------------------------------------------------------------
AMSC Sales Virgin Islands 4899 66-0518953 10802 Parkridge
Corporation, Blvd.
Ltd. Reston, Virginia
20191-5416
(703) 758-6000
- --------------------------------------------------------------------------------
AMSC Delaware (same) 52-1735106 (same)
Subsidiary
Corporation
- --------------------------------------------------------------------------------
American Delaware (same) 54-1755358 (same)
Mobile Satellite
Sales
Corporation
- --------------------------------------------------------------------------------
AMSC ARDIS Delaware (same) 36-3983833 (same)
Acquisition,
Inc.
- --------------------------------------------------------------------------------
AMSC ARDIS, Delaware (same) 36-3688865 (same)
Inc.
- --------------------------------------------------------------------------------
Radio Data New York (same) 36-3687936 (same)
Network
Holding
Corporation
- --------------------------------------------------------------------------------
ARDIS Holding New York (same) 36-4022106 (same)
Company General
Partnership
- --------------------------------------------------------------------------------
ARDIS Company New York (same) 36-4022130 (same)
General
Partnership
<PAGE>
Randy Segal
Vice President, General
Counsel and Secretary
American Mobile Satellite Corporation
10802 Parkridge Blvd.
Reston, Virginia 20191-5416
(703) 758-6130
(Name, address, including zip code,
and telephone number, including area code,
of agent for service)
Copies to:
Robert B. Ott
Arnold & Porter
555 Twelfth Street, N.W.
Washington, D.C. 20004
(202) 942-5008
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of the Registration Statement.
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box [ ].
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------
Proposed Proposed
Title of each class maximum maximum
of securities to be Amount to be offering price aggregate Amount of
registered Registered per unit offering price(1) registration fee
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12 1/4 Senior $335,000,000 100% (1) $335,000,000 $98,825
Subordinated
Exchange Notes due
2008
- -------------------------------------------------------------------------------------------------
Guarantees of the $335,000,000 (2)
12 1/4 Senior
Subordinated
Exchange Notes due
2008 (2)
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(1) Estimated pursuant to Rule 457(a) of the Securities Act of 1933 solely for
the purpose of computing the registration fee.
(2) Pursuant to Rule 457(n) under the Securities Act of 1933, no separate
registration fee is payable for the Guarantees.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 15, 1998
PROSPECTUS
[LOGO OF AMERICAN MOBILE APPEARS HERE]
$335,000,000
AMERICAN MOBILE SATELLITE CORPORATION
AMSC ACQUISITION COMPANY, INC.
OFFER TO EXCHANGE SERIES B 12 1/4% SENIOR NOTES DUE 2008
OF AMSC ACQUISITION COMPANY, INC.
FOR ANY AND ALL OF ITS OUTSTANDING SERIES A 12 1/4% SENIOR NOTES DUE 2008. THIS
EXCHANGE OFFER WILL EXPIRE AT 5:00P.M., NEW YORK CITY TIME, ON , 1998
UNLESS EXTENDED.
AMSC Acquisition Company, Inc., a Delaware corporation (the "Company"),
hereby offers (the "Exchange Offer"), upon the terms and conditions set forth
in this Prospectus (the "Prospectus") and the accompanying Letter of
Transmittal (the "Letter of Transmittal"), to exchange $1,000 principal amount
of its Series B 12 1/4% Senior Notes due 2008 (the "Exchange Notes"), which
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of which this
Prospectus is a part, for each $1,000 principal amount of its outstanding
Series A 12 1/4% Senior Notes due 2008 (the "Old Notes" and, together with the
Exchange Notes, the "Notes"), of which $335,000,000 principal amount is
outstanding as of the date hereof. The form and terms of the Exchange Notes are
the same as the form and terms of the Old Notes (which they are intended to
replace) except that the Exchange Notes will bear a Series B designation and
have been registered under the Securities Act and, therefore, will not bear
legends restricting their transfer. See "The Exchange Offer." The Exchange
Notes will evidence the same debt as the Old Notes (which they are intended to
replace) and will be issued under and be entitled to the benefits of the
Indenture (the "Indenture") dated March 31, 1998 among the Company, American
Mobile Satellite Corporation (the direct parent of the Company, "Holdings"),
all current and future subsidiaries of the Company, and State Street Bank and
Trust Co., as Trustee (the "Trustee"), governing the Notes. See "The Exchange
Offer" and "Description of Exchange Notes."
The Exchange Notes will bear interest at the rate of 12 1/4% per annum
payable semi-annually in arrears on April 1 and October 1, of each year,
commencing on October 1, 1998. The Exchange Notes will mature on March 31,
2008. The Company will not be required to make any mandatory sinking fund or
redemption payments with respect to the Exchange Notes. The Exchange Notes will
be redeemable at the option of the Company at any time on or after April 1,
2003 at the redemption prices set forth herein, plus accrued and unpaid
interest and Liquidated Damages (as defined herein), if any, to the redemption
date. In addition, the Company will be entitled, at any time on or before April
1, 2001, to redeem up to 35% of the aggregate principal amount of the Exchange
Notes with the proceeds of any Equity Offering (as defined herein) at a
redemption price equal to 112.25% of the principal amount of the Exchange
Notes, plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date; provided, however, that at least $217.8 million in aggregate
principal amount of Exchange Notes initially issued remains outstanding after
giving effect to such redemption. See "Description of the Exchange Notes--
Optional Redemption."
Upon the occurrence of a Change of Control, the Company will be required to
make an offer to repurchase all of the outstanding Exchange Notes at a price
equal to 101% of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, to the repurchase date. See "Description of the
Exchange Notes--Repurchase at the Option of Holders."
The Company is a holding company and substantially all of its operations are
conducted through its operating subsidiaries. The obligations of the Company
under the Exchange Notes will be fully and unconditionally guaranteed (the
"Guarantees") (i) on a subordinated unsecured basis by Holdings and (ii) on a
senior unsecured basis by all current and future subsidiaries of the Company
(collectively, the "Subsidiary Guarantors," and, together with Holdings, the
"Guarantors"). See "Description of the Exchange Notes--Subsidiary Guarantees,"
"--Holdings Guarantee" and "--Subordination of Holdings Guarantee."
(continued on next page)
--------------
SEE "RISK FACTORS" BEGINNING ON PAGE 18 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS WHO TENDER THEIR NOTES IN THE EXCHANGE
OFFER.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1998
<PAGE>
(cover page continued)
The Exchange Notes and the Guarantees will be senior obligations of the
Company and the Subsidiary Guarantors, and will rank pari passu in right of
payment with all other senior Indebtedness (as defined herein) of the Company
and the Subsidiary Guarantors, and will rank senior in right of payment to any
future subordinated Indebtedness of the Company and the Subsidiary Guarantors.
As of March 31, 1998, the Company on a consolidated basis had outstanding
Indebtedness with a principal amount of $374.2 million ($365.7 million net of
debt discount) and $28.0 million of other senior liabilities (including trade
payables). The Guarantee of Holdings is subordinate to all Indebtedness of
Holdings and will rank pari passu with or subordinate to all existing
subordinated Indebtedness of Holdings. The Indenture permits the Company to
incur additional senior Indebtedness, subject to certain limitations, and does
not limit Holdings' ability to incur additional indebtedness. See "Description
of the Exchange Notes--Certain Covenants."
The Company will accept for exchange any and all Old Notes validly tendered
and not withdrawn prior to 5:00 p.m., New York time, on [ ], 1998, unless
extended by the Company in its sole discretion (the "Expiration Date").
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m. on the
Expiration Date. The Exchange Offer is subject to certain customary
conditions. The Old Notes were sold by the Company on March 31, 1998 to the
Initial Purchasers (as defined herein) in an offering of units (the "Units
Offering"), each consisting of (i) $1,000 principal amount of Old Notes and
one Warrant to purchase 3.75749 shares of common stock, $.01 par value
("Common Stock") of Holdings, which was a transaction effected without
registration under the Securities Act in reliance upon an exemption under the
Securities Act. The Initial Purchasers subsequently placed the Old Notes with
qualified institutional buyers in reliance upon Rule 144A under the Securities
Act and pursuant to offers and sales that occurred outside the United States
within the meaning of Regulation S under the Securities Act. Accordingly, the
Old Notes may not be reoffered, resold or otherwise transferred unless
registered under the Securities Act or unless an applicable exemption from the
registration requirements of the Securities Act is available. The Exchange
Notes are being offered hereunder in order to satisfy the obligations of the
Company under the Debt Registration Rights Agreement (as defined herein)
entered into by the Company in connection with the offering of the Old Notes.
See "The Exchange Offer."
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission") to third parties, the Company believes
the Exchange Notes issued pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by any holder thereof (other than any
such holder that is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such holder's business
and such holder has no arrangement or understanding with any person to
participate in the distribution of such Exchange Notes. See "The Exchange
Offer--Purpose and Effect of the Exchange Offer" and "The Exchange Offer--
Resale of the Exchange Notes." Each broker-dealer (a "Participating Broker-
Dealer") that receives Exchange Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer as a result of market-making activities or other
trading activities. The Company has agreed that, for a period of one year
after the Expiration Date, it will make this Prospectus available to any
Participating Broker-Dealer for use in connection with any such resale. See
"Plan of Distribution."
There has not previously been any public market for the Old Notes or the
Exchange Notes. The Initial Purchasers have informed the Company that they
currently do not intend to make a market in the Exchange Notes. The Company
does not intend to list the Exchange Notes on any securities exchange or to
seek approval for quotation through any automated quotation system.
i
<PAGE>
Any Old Notes not tendered and accepted in the Exchange Offer will remain
outstanding and will be entitled to all the rights and will be subject to the
limitations applicable thereto under the Indenture. Following consummation of
the Exchange Offer, the holders of Old Notes will continue to be subject to
the existing restrictions upon transfer thereof and the Company will have no
further obligation to such holders to provide for registration under the
Securities Act of the Old Notes held by them. To the extent that Old Notes are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Old Notes could be adversely affected. See "Risk Factors--Exchange
Offer Procedures" and "Exchange Offer--Consequences of Failure to Exchange."
The Exchange Notes will be available initially only in book-entry form. The
Company expects that the Exchange Notes issued pursuant to this Exchange Offer
will be issued in the form of one or more Global Notes (as defined herein),
which will be deposited with, or on behalf of, The Depository Trust Company
(the "Depositary") and registered in its name or in the name of Cede & Co.,
its nominee. Beneficial interests in a Global Note representing the Exchange
Notes will be shown on, and transfers thereof will be effected through,
records maintained by the Depositary and its participants. After the initial
issuance of the Global Notes, Exchange Notes in certificated form will be
issued in exchange for a Global Note only on the terms set forth in the
Indenture. See "Description of Exchange Notes--Book Entry, Delivery and Form."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD NOTES ARE URGED TO READ THIS PROSPECTUS AND THE
RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER
THEIR OLD NOTES PURSUANT TO THE EXCHANGE OFFER.
This Prospectus, together with the Letter of Transmittal, is being sent to
all registered holders of Old Notes as of [ ,] 1998.
The Company will not receive any cash proceeds from the issuance of the
Exchange Notes offered hereby. No dealer-manager is being used in connection
with this Exchange Offer. The Company will pay all expenses incurred by it
incident to the Exchange Offer. See "Use of Proceeds" and "Plan of
Distribution."
The Exchange Offer is not being made to, nor will tenders be accepted from
or on behalf of, holders of the Old Notes in any jurisdiction in which the
making of the Exchange Offer or acceptance thereof would not be in compliance
with the laws of such jurisdiction or would otherwise not be in compliance
with any provision of any applicable security law.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS: THIS PROSPECTUS INCLUDES
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT. ALL STATEMENTS OTHER THAN
STATEMENTS OF HISTORICAL FACTS INCLUDED IN THIS PROSPECTUS, INCLUDING WITHOUT
LIMITATION, CERTAIN STATEMENTS UNDER THE "PROSPECTUS SUMMARY," "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND
"BUSINESS," MAY CONSTITUTE FORWARD-LOOKING STATEMENTS. READERS ARE CAUTIONED
NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK
ONLY AS OF THE DATE HEREOF. ALTHOUGH THE COMPANY AND HOLDINGS BELIEVE THAT THE
EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, THEY
CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO BE CORRECT.
IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THE ISSUER'S EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE DISCLOSED IN THIS
PROSPECTUS, INCLUDING WITHOUT LIMITATION IN CONJUNCTION WITH THE FORWARD-
LOOKING STATEMENTS INCLUDED IN THIS PROSPECTUS AND UNDER "RISK FACTORS." ALL
SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE
COMPANY OR HOLDINGS OR PERSONS ACTING ON THEIR BEHALF ARE EXPRESSLY QUALIFIED
IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS.
ii
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements, including the notes thereto,
included elsewhere or incorporated by reference in this Prospectus. As used in
this Prospectus, the "Company" means AMSC Acquisition Company, Inc. and its
operating subsidiaries. "Holdings" means American Mobile Satellite Corporation,
the direct parent and sole owner of the Company. Certain market research data
contained in this Prospectus was provided by The Strategis Group ("Strategis");
while some of this data is from publicly available reports of Strategis, the
Company also retained Strategis to provide the Company with additional market
research data.
OVERVIEW
The Company, formed through the combination of Holdings' wholly owned
operating subsidiaries that offer mobile data and voice communications services
("American Mobile") and ARDIS Company ("ARDIS"), is a leading provider of
nationwide wireless communications services, including data, dispatch, and
voice services, primarily to business customers in the United States. The
Company offers a broad range of end-to-end wireless solutions utilizing a
seamless network consisting of the nation's largest, most fully-deployed
terrestrial wireless data network and a satellite in geosynchronous orbit. On a
pro forma basis, the Company had service revenue of $15.8 million for the first
quarter of 1998 and approximately 85,200 customer units in service at March 31,
1998. In addition, the Company has recently signed customer contracts, subject
to certain conditions, that it believes will result in the activation of over
100,000 new units over the next three years. Through Holdings, the Company's
major equity investors include Hughes Electronics Corporation ("Hughes"),
Motorola, Inc. ("Motorola"), Singapore Telecommunications Ltd. ("Singapore
Telecom") and AT&T Wireless Services, Inc. ("AT&T Wireless"), who in the
aggregate will own approximately 61.4% of Holdings on a fully diluted basis.
The Company expects to capitalize on the substantial and growing market for
wireless data communications services, which Strategis estimates grew at a
compound annual unit growth rate of 28% from 1994 to 1997. Strategis further
estimates that the addressable market for wireless data products is composed of
approximately 12.5 million mobile workers in occupations, such as
transportation and field services, with significant wireless communication and
data access needs and that approximately 10.4 million of these workers will use
some form of mobile data service by 2001. In addition, there is a large and
growing market for wireless telemetry applications such as utility meter
reading, premises alarm monitoring and point-of-sale credit and debit card
transaction processing. The Company believes this growth is being driven by the
widespread acceptance of Internet and intranet applications, logistical
requirements for just-in-time delivery and position location services,
development of more compact, less expensive user devices and a significant
increase in the use of data applications such as e-mail.
Through its ability to offer a broad range of services on a nationwide scale,
the Company believes that it is well positioned to serve the needs of mobile
workers in the United States. Within its addressable market, the Company
concentrates its sales and marketing efforts on the transportation, field
services and emerging two-way messaging markets, where it believes that its
combination of guaranteed delivery and high reliability, deep in-building
penetration and geographic breadth of coverage provide a significant
competitive advantage over other networks.
1
<PAGE>
BUSINESS STRATEGY
The Company's objective is to maximize its revenues by delivering value-added
services to end users in specific market segments. To meet this objective and
to capitalize upon the competitive advantages resulting from the combination of
American Mobile and ARDIS, the Company intends to: (i) offer business customers
a broad range of nationwide wireless service and end-to-end data solutions;
(ii) integrate and leverage the advantages of its nationwide terrestrial and
satellite data networks; (iii) enhance market penetration by lowering
customers' "total cost of ownership;" and (iv) expand the use of alternate
distribution channels to accelerate network loading.
Offer Business Customers a Broad Range of Nationwide Wireless Solutions. The
Company believes its corporate customers prefer a single-source service
provider capable of delivering a broad range of efficient and cost effective
solutions to meet their need for mobile wireless communications. The Company
believes that it has and will continue to have a unique strategic advantage in
being able to provide one-stop shopping across a broad range of products,
including two-way paging and advanced messaging, packaged e-mail and LAN
solutions, custom data applications, dual mode terrestrial/satellite data, and
satellite voice and dispatch functions. Through its staff of approximately 230
direct sales, engineering support and customer service professionals, the
Company provides a suite of bundled wireless services, and a single point of
contact for sales, service, billing and project management, all on a national
basis.
Integrate and Leverage Network Advantages. The Company has spent over a
decade developing and deploying its nationwide terrestrial and satellite
networks and now seeks to accelerate growth by leveraging its integrated
network. Unlike many competitors with plans to build out limited city-wide or
regional terrestrial networks or to launch satellites, the Company's technology
infrastructure is in place and operational today, with future network expansion
requirements arising primarily from increased customer demand. The Company
believes that this integrated terrestrial/satellite network provides key
competitive advantages currently unmatched by any competitor: virtually 100%
nationwide geographic coverage, guaranteed message delivery, and, in the areas
covered by the ARDIS network, deep in-building penetration. By integrating the
operations of its terrestrial and satellite networks, the Company expects to
achieve operating efficiencies and economies of scale that it believes will
lead to improved operating margins.
Enhance Market Penetration By Reducing Customers' "Total Cost of
Ownership." Historically, the most significant obstacle to the implementation
of enterprise-wide wireless data applications has been the relatively high
total cost of ownership. The total cost of ownership is comprised of three
primary elements: the cost of the subscriber unit, the required investment in
software development, and the monthly cost of network access and usage. In most
of the Company's applications, the monthly cost of network access and usage has
been the least prohibitive of these elements. Until recently, subscriber unit
costs in excess of $3,000 and custom software investments of up to several
million dollars were common. By working with business partners and vendors, and
making strategic software investments, the Company has succeeded in
significantly lowering customers' total cost of ownership. New subscriber
units, including low-cost two-way messaging units and laptop modem cards, are
now available for $500 or less and substantial development work is underway
with several of the Company's vendors to accelerate reductions of equipment
cost, unit weight and size. In the future, the Company expects that the
increased subscriber unit volumes associated with recent large contract awards
will lead to additional unit price reductions. In addition, customers can now
use off-the-shelf software applications that are relatively inexpensive, or in
the case of the Company's two-way messaging service, free. The Company believes
that these lower price points will accelerate the adoption of the Company's
services in its historical markets, and will enable the Company to develop new
markets, such as wireless point-of-sale and telemetry.
Expand Alternate Distribution Channels. The Company sells its service
primarily through a direct sales force and resellers. In order to accelerate
network loading, the Company expects to expand its use of indirect
2
<PAGE>
distribution channels. To date, the Company has entered into agreements with
Enron Energy Services ("Enron") (utility monitoring), Ameritech SecurityLink
(alarm monitoring), Global Payment Systems (point-of-sale), GE Logisticom
(asset tracking and dispatching) and other value-added resellers to penetrate
markets where such resellers have a market presence and significantly greater
resources than the Company, including dedicated sales personnel. In addition,
the Company is in the process of establishing relationships with existing
paging companies, paging resellers, and other targeted distribution partners to
market two-way guaranteed messaging services. The Company believes that the
resale of its network is an alternative that paging companies will consider
when assessing a move from one-way to two-way messaging because it may reduce
or eliminate the need for additional investment in network infrastructure. The
Company intends to utilize paging companies and other similar partners with
well established distribution capabilities to develop markets outside of the
Company's historical market segments.
THE UNITS OFFERING
On March 31, 1998, the Company consummated an offering, pursuant to which it
sold 335,000 Units, each consisting of (a) $1,000 principal amount of Old Notes
due 2008 of the Company and (b) one Warrant to purchase 3.75749 shares of
Common Stock of Holdings (the "Units Offering"). The Warrants are exercisable
at $12.51 per share, subject to certain anti-dilution provisions. Warrant
holders may exercise the Warrants at any time on or after the earlier to occur
of (i) the first anniversary of the Closing Date (as defined herein) and (ii)
in the event a Change of Control occurs, the date Holdings mails notice thereof
to the holders of Notes and Warrants. Unless exercised, the Warrants will
expire on April 1, 2008. If all Warrants were exercised as of the date of
issuance of the Warrants, the Warrants would represent approximately 3.00% of
the Common Stock outstanding on a fully-diluted basis after giving effect to
the exercise of all in-the-money outstanding options or rights issued by
Holdings. The Old Notes and Warrants will become separable no later than upon
the commencement of the Exchange Offer.
The Company used approximately $113.0 million of the net proceeds from the
Units Offering to fund the purchase of a portfolio of U.S. government
securities (the "Pledged Securities"), which will provide funds sufficient to
pay in full when due the first six scheduled interest payments on the Notes.
The Pledged Securities are pledged as security for the repayment of principal
of and interest on the Notes, Liquidated Damages, if any, and all other
obligations under the Indenture. See "Use of Proceeds" and "Description of the
Exchange Notes --Interest Reserve." Other proceeds have been, or will be, used
as follows: (i) approximately $50.0 million for the cash portion of the
acquisition of ARDIS (the "Acquisition"), (ii) approximately $100.0 million for
the repayment of certain bank financing, (iii) approximately $17.9 million for
repayment of advances from Holdings, which funds are intended to provide for
the payment of Holdings' interest payments on the Term Loan Facility (as
defined below) for three years, (iv) approximately $10.1 million for repayment
of the Bridge Facility (as defined below), (v) $10.0 million for the escrow for
UPS Guarantee (as defined below) obligations, (vi) approximately $7.2 million
for the payment of deferred obligations and (vii) approximately $14.8 million
for payment of estimated fees and expenses in connection with the Acquisition,
the Units Offering and the New Bank Financing. The remaining net proceeds will
be used for working capital purposes. See "Use of Proceeds."
The Units were sold by the Company on March 31, 1998 to Bear, Stearns & Co.
Inc., J.P. Morgan & Co., TD Securities, and BancAmerica Robertson Stephens (the
"Initial Purchasers") pursuant to a Purchase Agreement dated March 26, 1998
(the "Purchase Agreement"). The Initial Purchasers subsequently resold the
Units to qualified institutional buyers pursuant to Rule 144A under the
Securities Act and pursuant to offers and sales that occurred outside the
United States within the meaning of Regulation S under the Securities Act.
Pursuant to the Purchase Agreement, the Company and the Initial Purchasers
entered into a Debt Registration Rights Agreement dated March 31, 1998 (the
"Debt Registration Rights Agreement"), which grants the holders of the Old
Notes certain exchange and registration rights. The Exchange Offer is intended
to satisfy certain obligations of the Company under the Debt Registration
Rights Agreement.
3
<PAGE>
CORPORATE STRUCTURE
The following diagram illustrates the corporate structure of the Company:
Holdings(1)
----------------------------
AMRC Holdings,
Inc. and
The Company(2)
American Mobile
Radio Corporation
("AMRC")
-----------------------------------------------------------
American Mobile
Satellite Sales AMSC Sales AMSC Subsidiary
Corporation(3)(4) Corporation Corporation(3)(4) ARDIS(4)(5)
Ltd.(3)(4)
(1) Guarantor of the Notes on a subordinated, unsecured basis.
(2) The Company is a wholly-owned subsidiary of Holdings.
(3) American Mobile Satellite Sales Corporation, AMSC Sales Corporation Ltd.
and AMSC Subsidiary Corporation are collectively referred to as "American
Mobile."
(4) Guarantors of the Notes on a joint and several, full and unconditional,
senior unsecured basis.
(5) Includes subsidiaries of ARDIS.
NEW BANK FINANCING
In connection with the Units Offering, Holdings, the Company and its
subsidiaries renegotiated the then existing $200.0 million bank facility (the
"Bank Financing") to provide for two facilities: (i) a $100.0 million unsecured
five-year reducing revolving credit facility (the "Revolving Credit Facility")
guaranteed by the Company's subsidiaries, which matures on March 31, 2003 and
(ii) a $100.0 million five-year, term loan facility with up to three additional
one-year extensions, subject to lender approval (the "Term Loan Facility,"
collectively with the Revolving Credit Facility, the "New Bank Financing"). The
Revolving Credit Facility ranks pari passu with the Exchange Notes. The Term
Loan Facility is secured by the assets of Holdings, principally its interests
in AMRC and the Company, and is effectively subordinated to the Revolving
Credit Facility and the Notes. The New Bank Financing is severally guaranteed
by Hughes, Singapore Telecom and Baron Capital Partners, L.P.
4
<PAGE>
SATELLITE LEASE AND SATELLITE PURCHASE AGREEMENTS
On December 4, 1997, Holdings and American Mobile entered into an agreement
with African Continental Telecommunications Ltd. ("ACTEL") to lease the
Company's satellite, "MSAT-2," (the "Satellite Lease Agreement") for deployment
over sub-Saharan Africa. The five-year lease provides for aggregate payments to
the Company of $182.5 million. Simultaneously, the Company agreed with TMI
Communications and Company, Limited Partnership ("TMI") to acquire a one-half
ownership interest in TMI's satellite, "MSAT-1," (the "Satellite Purchase
Agreement") at an aggregate cost to the Company of $60.0 million. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources." It is anticipated that the net
proceeds of the Satellite Lease Agreement and Satellite Purchase Agreement will
be used primarily to repay the Company's Revolving Credit Facility, and
secondarily to provide the Company with additional liquidity. In addition, any
amounts repaid from the net proceeds of the Satellite Lease Agreement and
Satellite Purchase Agreement would reduce the commitment available to the
Company under the Revolving Credit Facility. See "Description of New Bank
Financing." The consummation of the Satellite Lease Agreement is subject to
certain conditions and there can be no assurance that it will be consummated.
See "Risk Factors--Satellite Lease and Purchase Agreement Risks" and
"Business--Satellite Lease and Satellite Purchase Agreements."
5
<PAGE>
THE EXCHANGE OFFER
SECURITIES OFFERED.................. $335,000,000 aggregate principal amount
of Series B 12 1/4% Senior Notes due 2008
of the Company (the "Exchange Notes").
THE EXCHANGE OFFER.................. 1,000 principal amount of the Exchange
Notes in exchange for each $1,000
principal amount of Old Notes. As of the
date hereof, $335,000,000 aggregate
principal amount of Old Notes are
outstanding. The Company will issue the
Exchange Notes to holders on or promptly
after the Expiration Date.
Based on an interpretation by the staff
of the Commission set forth in no-action
letters issued to third parties, the
Company believes that Exchange Notes
issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for
resale, resold and otherwise transferred
by any holder thereof (other than any
such holder which is an "affiliate" of
the Company within the meaning of Rule
405 under the Securities Act) without
compliance with the registration and
prospectus delivery provisions of the
Securities Act, provided that such
Exchange Notes are acquired in the
ordinary course of such holder's business
and that such holder does not intend to
participate and has no arrangement or
understanding with any person to
participate in the distribution of such
Exchange Notes.
Each Participating Broker-Dealer that
receives Exchange Notes for its own
account pursuant to the Exchange Offer
must acknowledge that it will deliver a
prospectus in connection with any resale
of such Exchange Notes. The Letter of
Transmittal states that by so
acknowledging and by delivering a
prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act. This Prospectus, as it
may be amended or supplemented from time
to time, may be used by a Participating
Broker-Dealer in connection with resales
of Exchange Notes received in exchange
for Old Notes where such Old Notes were
acquired by such Participating Broker-
Dealer as a result of market-making
activities or other trading activities
(other than a resale of an unsold
allotment from the original sale of Old
Notes). The Company has agreed that, for
a period of one year after the Expiration
Date, it will make this Prospectus
available to any Participating Broker-
Dealer for use in connection with any
such resale. See "Plan of Distribution."
6
<PAGE>
Any holder who tenders in the Exchange
Offer with the intention to participate,
or for the purpose of participating, in a
distribution of the Exchange Notes could
not rely on the position of the staff of
the Commission enunciated in no-action
letters and, in the absence of an
exemption therefrom, must comply with the
registration and prospectus delivery
requirements of the Securities Act in
connection with any resale transaction.
Failure to comply with such requirements
in such instance may result in such
holder incurring liability under the
Securities Act for which the holder is
not indemnified by the Company.
EXPIRATION DATE..................... 5:00 p.m., New York time, on [ ,] 1998
unless the Exchange Offer is extended, in
which case the term "Expiration Date"
means the latest date and time to which
the Exchange Offer is extended.
ACCRUED INTEREST ON THE EXCHANGE
NOTES AND THE OLD NOTES.............
Each Exchange Note will bear interest
from the most recent date to which
interest has been paid or duly provided
for on the Old Note surrendered in
exchange for such Exchange Note or, if no
interest has been paid or duly provided
for on such Old Note, from March 31,
1998. Interest on the Exchange Notes is
payable semi-annually on each April 1 and
October 1, commencing on October 1, 1998.
Holders of Old Notes whose Old Notes are
accepted for exchange will not receive
accrued interest on such Old Notes for
any period from and after the last date
to which interest has been paid or duly
provided for on the Old Notes prior to
the original issue date of the Exchange
Notes or, if no such interest has been
paid or duly provided for, will not
receive any accrued interest on such Old
Notes, and will be deemed to have waived,
the right to receive any interest on such
Old Notes accrued from and after March
31, 1998.
CONDITIONS TO THE EXCHANGE OFFER.... The Exchange Offer is subject to certain
customary conditions, which may be waived
by the Company. See "The Exchange Offer--
Conditions."
PROCEDURES FOR TENDERING OLD Each holder of Old Notes wishing to
NOTES............................... accept the Exchange Offer must complete,
sign and date the accompanying Letter of
Transmittal, or a facsimile thereof, in
accordance with the instructions
contained herein and therein, and mail or
otherwise deliver such Letter of
Transmittal, or such facsimile, together
with the Old Notes and any other required
documentation to the Exchange Agent (as
defined herein) at the address
7
<PAGE>
set forth in the Letter of Transmittal.
By executing the Letter of Transmittal,
each holder will represent to the Company
that, among other things, the Exchange
Notes acquired pursuant to the Exchange
Offer are being obtained in the ordinary
course of business of the person
receiving such Exchange Notes, whether or
not such person is the holder, that
neither the holder nor any such other
person has any arrangement or
understanding with any person to
participate in the distribution of such
Exchange Notes and that neither the
holder nor any such other person is an
"affiliate," as defined under Rule 405 of
the Securities Act. See "The Exchange
Offer--Purpose and Effect of the Exchange
Offer" and "The Exchange Offer--
Procedures for Tendering."
UNTENDERED OLD NOTES................ Following the consummation of the
Exchange Offer, holders of Old Notes
eligible to participate but who do not
tender their Old Notes will not have any
further exchange rights and such Old
Notes will continue to be subject to
certain restrictions on transfer.
Accordingly, the liquidity of the market
for such Old Notes could be adversely
affected.
CONSEQUENCES OF FAILURE TO The Old Notes that are not exchanged
EXCHANGE............................ pursuant to the Exchange Offer will
remain restricted securities.
Accordingly, such Old Notes may be resold
only (i) to the Company, (ii) pursuant to
an effective registration statement under
the Securities Act, (iii) pursuant to
Rule 144A or Rule 144 under the
Securities Act, (iv) outside the United
States to a foreign person pursuant to
the requirements of Rule 904 under the
Securities Act, (v) to an institutional
"accredited investor" as defined in Rule
501(a)(1), (2), (3) or (7) under the
Securities Act who furnishes the Trustee
with a letter containing certain
representations and agreements and, in
the case of any transfer of aggregate
principal amount of Old Notes of $100,000
or less an opinion of counsel, if the
Company so requests, or (vi) pursuant to
some other exemption under the Securities
Act (and based on an opinion of counsel,
if the Company so requests). See "The
Exchange Offer--Consequences of Failure
to Exchange."
SHELF REGISTRATION STATEMENT........ In the event that (i) the Exchange Offer
is not available to any holder or may not
be consummated because, in either case,
it would violate applicable securities
laws or because the applicable
interpretations of the staff of the
Commission would not permit the Company
to effect the Exchange Offer, or (ii) in
certain circumstances the holder notifies
the Company that it is unable to
8
<PAGE>
participate in the Exchange Offer or is
unable to use this Prospectus, the
Company will cause to be filed with the
Commission, no later than 30 days after
such obligation arises, a shelf
registration statement (the "Shelf
Registration Statement"). The Company
will use its best efforts to cause the
Shelf Registration Statement to be
declared effective on or before the 135th
day after the completion of the Old Notes
Offering. The Company has agreed to
maintain the effectiveness of the Shelf
Registration Statement, under certain
circumstances, for a maximum of two years
following the date of the completion of
the Old Notes Offering.
SPECIAL PROCEDURES FOR BENEFICIAL Any beneficial owner whose Old Notes are
OWNERS.............................. registered in the name of a broker,
dealer, commercial bank, trust company or
other nominee and who wishes to tender
should contact such registered holder
promptly and instruct such registered
holder to tender on such beneficial
owner's behalf. If such beneficial owner
wishes to tender on such owner's own
behalf, such owner must, prior to
completing and executing the Letter of
Transmittal and delivering its Old Notes,
either make appropriate arrangements to
register ownership of the Old Notes in
such owner's name or obtain a properly
completed bond power from the registered
holder. The transfer of registered
ownership may take considerable time. The
Company will keep the Exchange Offer open
for not less than twenty days in order to
provide for the transfer of registered
ownership.
GUARANTEED DELIVERY PROCEDURES...... Holders of Old Notes who wish to tender
their Old Notes and whose Old Notes are
not immediately available or who cannot
deliver their Old Notes, the Letter of
Transmittal or any other documents
required by the Letter of Transmittal to
the Exchange Agent (or comply with the
procedures for book-entry transfer) prior
to the Expiration Date must tender their
Old Notes according to the guaranteed
delivery procedures set forth in "The
Exchange Offer--Guaranteed Delivery
Procedures."
WITHDRAWAL RIGHTS................... Tenders may be withdrawn at any time
prior to 5:00 p.m., New York time, on the
Expiration Date.
ACCEPTANCE OF NOTES AND DELIVERY OF
EXCHANGE NOTES.....................
The Company will accept for exchange,
subject to the conditions described under
"The Exchange Offer--Conditions," any and
all Old Notes which are properly tendered
in the Exchange Offer prior to 5:00 p.m.,
New York time, on the Expiration Date.
The Exchange Notes
9
<PAGE>
issued pursuant to the Exchange Offer
will be delivered promptly following the
Expiration Date. See "The Exchange
Offer--Terms of the Exchange Offer."
USE OF PROCEEDS..................... There will be no cash proceeds to the
Company from the exchange pursuant to the
Exchange Offer.
EXCHANGE AGENT...................... State Street Bank and Trust Co.
THE EXCHANGE NOTES
GENERAL............................. The form and terms of the Exchange Notes
are the same as the form and terms of the
Old Notes (which they replace) except
that (i) the Exchange Notes bear a Series
B designation, (ii) the Exchange Notes
have been registered under the Securities
Act and, therefore, will not bear legends
restricting the transfer thereof, and
(iii) the holders of Exchange Notes will
not be entitled to certain rights under
the Debt Registration Rights Agreement,
including the provisions providing for an
increase in the interest rate on the Old
Notes in certain circumstances relating
to the timing of the Exchange Offer,
which rights will terminate when the
Exchange Offer is consummated. See "The
Exchange Offer--Purpose and Effect of the
Exchange Offer." The Exchange Notes will
evidence the same debt as the Old Notes
and will be entitled to the benefits of
the Indenture. See "Description of
Exchange Notes." The Warrants issued in
connection with the issuance of the Old
Notes are not subject to the Exchange
Offer and will continue to be subject to
the restrictions on transfer set forth
therein.
SECURITIES OFFERED.................. $335,000,000 aggregate principal amount
of Series B 12 1/4% Senior Notes due 2008
of the Company.
MATURITY............................ March 31, 2008.
INTEREST............................ The Exchange Notes will bear interest at
a rate of 12 1/4% per annum, payable
semi-annually in arrears on April 1 and
October 1 of each year, commencing on
October 1, 1998.
RANKING............................. The Exchange Notes will be senior
obligations of the Company, will rank
pari passu in right of payment with all
existing and future unsecured senior
Indebtedness (as defined herein) of the
Company and will rank senior in right of
payment to any future subordinated
Indebtedness (as defined herein) of the
Company. As of March 31, 1998, after
giving effect to the Units Offering on a
consolidated basis, the Company had
outstanding indebtedness with a principal
amount of $374.2 million
10
<PAGE>
($365.7 million net of debt discount).
Holdings is a holding company and
substantially all of its operations are
conducted through its operating
subsidiaries. The indenture pursuant to
which the Exchange Notes will be issued
(the "Indenture") permits the Company to
incur additional Indebtedness, including
senior Indebtedness and secured
Indebtedness, subject to certain
limitations and does not limit Holdings'
ability to incur additional Indebtedness.
See "Capitalization" and "Description of
the Exchange Notes--Certain Covenants--
Incurrence of Indebtedness and Issuance
of Preferred Stock."
INTEREST RESERVE.................... The Company used approximately $113.0
million of the net proceeds from the
Units Offering to purchase and pledge to
the Trustee, for the benefit of the
holders of the Notes, the Pledged
Securities, which are in an amount
sufficient upon receipt of scheduled
interest and principal payments, to
provide for payment in full when due of
the first six scheduled semi-annual
interest payments on the Notes. The
Pledged Securities are pledged as
security for the repayment of the
principal of and interest on the Notes,
Liquidated Damages, if any, and all other
obligations under the Indenture. When an
interest payment is due, the Company may
either deposit sufficient funds to pay
the interest scheduled to be paid or
direct the Trustee to release from the
Pledge Account (as defined herein) funds
sufficient to pay the interest scheduled.
In the event the Company exercises the
former option, the Pledge Agreement
provides the Company may direct to
Trustee to release proceeds or the
Pledged Securities from the Pledge
Account in a like amount. If the Company
makes the first six scheduled interest
payments on the Notes in a timely manner
and no Default (as defined herein) or
Event of Default (as defined herein) is
then continuing, the remaining Pledged
Securities, if any, will be released from
the Pledge Account and the Notes will
thereafter be unsecured obligations of
the Company. See "Description of the
Notes--Interest Reserve."
GUARANTEES.......................... The obligations of the Company under the
Exchange Notes will be fully and
unconditionally guaranteed by Holdings on
a subordinated unsecured basis, and by
the Subsidiary Guarantors on a joint and
several, full and unconditional senior
unsecured basis. The Subsidiary
Guarantees will rank pari passu in right
of payment with all other senior
Indebtedness of the Subsidiary
Guarantors, and will rank senior in right
of payment to any future subordinated
Indebtedness of the Subsidiary
Guarantors. The Guarantee of Holdings is
subordinate to
11
<PAGE>
all Indebtedness of Holdings and will
rank pari passu with or subordinate to
all existing subordinated indebtedness of
Holdings. As of March 31, 1998, the
aggregate amount of outstanding senior
Indebtedness and other senior liabilities
(including trade payables) of Holdings on
a stand-alone basis was approximately
$100.0 million. See "Description of
the Exchange Notes--Subsidiary
Guarantees," "--Holdings Guarantee" and
"--Subordination of Holdings Guarantee."
OPTIONAL REDEMPTION................. The Exchange Notes will be redeemable, at
the option of the Company, in whole or in
part, at any time on or after April 1,
2003, at the redemption prices set forth
herein, plus accrued and unpaid interest
and Liquidated Damages, if any, thereon
to the applicable redemption date.
Notwithstanding the foregoing, on or
prior to April 1, 2001, the Company may
redeem at any time or from time to time
up to 35% of the aggregate principal
amount of the Exchange Notes at a
redemption price equal to 112.25% of the
principal amount thereof, plus accrued
and unpaid interest and Liquidated
Damages, if any, thereon to the
applicable redemption date, with the net
proceeds of an Equity Offering; provided,
that at least $217.8 million in the
aggregate principal amount of the
Exchange Notes initially issued remains
outstanding after giving effect to the
redemption thereof. See "Description of
the Exchange Notes--Optional Redemption."
CHANGE OF CONTROL................... Upon the occurrence of a Change of
Control, the Company will be required to
make an offer to repurchase all of the
outstanding Exchange Notes at a price
equal to 101% of the principal amount
thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, thereon
to the repurchase date. See "Description
of the Exchange Notes--Repurchase at the
Option of Holders--Change in Control."
CERTAIN COVENANTS................... The Indenture contains certain covenants
that, among other things, limit the
ability of the Company to incur
additional Indebtedness, pay dividends or
make other distributions, repurchase any
capital stock or subordinated
Indebtedness, make certain investments,
create certain liens, enter into certain
transactions with affiliates, sell
assets, enter into certain mergers and
consolidations, and enter into sale and
leaseback transactions. See "Description
of the Exchange Notes--Certain
Covenants."
12
<PAGE>
RISK FACTORS
For a discussion of certain risk factors that should be considered by
prospective purchasers in evaluating an investment in the Units, see "Risk
Factors."
PRO FORMA SUMMARY FINANCIAL AND OTHER DATA
The following summary pro forma financial information gives effect to (i) the
Acquisition, (ii) the Units Offering and (iii) the New Bank Financing as if
such transactions had been consummated on January 1 of each of the periods
presented. The pro forma combined financial information is presented for
illustrative purposes only and is not necessarily indicative of what the
Company's actual financial position or results of operations would have been
had the above-referenced transactions been consummated as of the above-
referenced dates or of the financial position or results of operations that may
be reported by the Company in the future.
The following data should be read in conjunction with Holdings' Consolidated
Financial Statements and related notes, ARDIS' Combined Financial Statements
and related notes, "Management's Discussion and Analysis of Financial Condition
and Results of Operations," and other financial information included elsewhere
or incorporated by reference herein, as applicable.
13
<PAGE>
THE COMPANY
PRO FORMA SUMMARY FINANCIAL AND OTHER DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
YEAR ENDED --------------------
DECEMBER 31, 1997 1997 1998
----------------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT
SUBSCRIBERS AND REVENUE PER UNIT)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Services............................ $ 62,109 $ 14,674 $ 15,820
Equipment and consulting............ 25,856 4,859 4,134
--------- --------- ---------
Total revenue..................... 87,965 19,533 19,954
Operating loss........................ (118,986) (27,525) (24,094)
Net loss.............................. (165,131) (38,693) (36,053)
OTHER FINANCIAL AND OPERATING DATA:
Number of subscribers (end of period)
(1).................................. 81,300 71,900 85,200
Average monthly revenue per unit (1).. $ 62 $ 70 $ 63
EBITDA (2)............................ (56,907) (12,086) (9,593)
Depreciation and amortization......... 61,204 14,564 14,501
Capital expenditures.................. 10,334 1,781 4,891
Ratio of earnings to fixed charges
(3).................................. -- -- --
</TABLE>
- --------------------
(1) Number of subscribers and average monthly revenue per unit calculations
have been adjusted to account for subscribers common to ARDIS and American
Mobile.
(2) "EBITDA" consists of operating income (loss) plus depreciation and
amortization. EBITDA is a financial measure commonly used in the Company's
industry and should not be construed as an alternative to operating income
(as determined in accordance with GAAP) or as a measure of liquidity.
EBITDA does not represent funds available for dividends, reinvestment or
other discretionary activities. EBITDA for the three-months ending March
31, 1997 and for the year ending December 31, 1997 have been adjusted to
include $875,000 of other income from the licensing of certain technology.
(3) For purposes of calculating the ratio of earnings to fixed charges,
earnings are defined as loss before income taxes and extraordinary items
plus fixed charges. Fixed charges consist of interest expense, amortization
of debt issuance costs, accretion of discount on preferred stock and a
reasonable approximation of the interest factor included in rental payments
on operating leases. Earnings were inadequate to cover fixed charges for
the year ended December 31, 1997 by $165.1 million, and for the three
months ended March 31, 1997 and 1998 by $38.7 million and $36.1 million,
respectively.
14
<PAGE>
SUMMARY FINANCIAL AND OTHER DATA
The following summary historical financial information of American Mobile has
been derived from Holdings' historical financial statements and should be read
in conjunction with such consolidated financial statements and the notes
thereto incorporated by reference into in this Prospectus. Holdings'
Consolidated Financial Statements include the combined condensed financial
statements of American Mobile in Note 17 for the three-year period ended
December 31, 1997. Holdings' Consolidated Financial Statements for each of the
five years in the period ended December 31, 1997 have been audited by Arthur
Andersen LLP, independent auditors, and appear elsewhere in this Prospectus.
The following summary historical financial information for ARDIS as of and
for each of the three years in the three-year period ended December 31, 1997
have been derived from the audited combined financial statements of ARDIS,
which have been audited by KPMG Peat Marwick LLP, independent auditors, and are
incorporated by reference into this Prospectus.
Summary historical financial information for American Mobile for 1993 and for
ARDIS for 1993 and 1994 have been derived from the audited consolidated
financial statements of Holdings and unaudited combined financial statements of
ARDIS, respectively. In the respective opinions of management of American
Mobile and ARDIS, such unaudited summary financial statements have been
prepared on the same basis as the audited financial statements referred to
above and include all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation of the financial information for the periods
presented.
Summary historical financial information for American Mobile and ARDIS as of
and for the three months ended March 31, 1997 and 1998 have been derived from
unaudited consolidated financial statements of Holdings and unaudited combined
financial statements of ARDIS, respectively. In the respective opinions of
management of American Mobile and ARDIS, such unaudited combined financial
statements have been prepared on the same basis as the audited financial
statements referred to above and include all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of the financial
information for the interim periods. Results of operations for the three months
ended March 31, 1998, are not necessarily indicative of the results to be
expected for fiscal 1998. The following data should be read in conjunction with
ARDIS' Combined Financial Statements and related notes and Holdings'
Consolidated Financial Statements and related notes including American Mobile's
combined condensed financial statements, "Management's Discussion and Analysis
of Financial Condition and Results of Operations," and other financial
information included elsewhere or incorporated by reference herein, as
applicable.
15
<PAGE>
AMERICAN MOBILE
SUMMARY COMBINED FINANCIAL AND OTHER DATA
<TABLE>
<CAPTION>
THREE
MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------------- ----------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- -------- -------- ------- -------
(DOLLARS IN THOUSANDS, EXCEPT SUBSCRIBERS AND REVENUE PER
UNIT)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Services.................................... $ 852 $ 3,662 $ 6,873 $ 9,201 $ 20,684 $ 4,173 $ 6,418
Equipment................................... -- 1,578 1,924 18,529 23,530 4,532 3,604
------- ------- ------- -------- -------- ------- -------
Total revenue............................... 852 5,240 8,797 27,730 44,214 8,705 10,022
Operating loss............................... (25,112) (29,984) (71,278) (120,893) (99,535) (24,071) (18,928)
Net loss (1)................................. (24,910) (29,137) (73,341) (164,977) (149,566) (34,748) (32,613)
OTHER FINANCIAL AND OPERATING DATA:
Number of subscribers (end of period) (2).... -- -- -- 20,300 32,400 23,000 34,800
Average monthly revenue per unit (2)......... -- -- -- $ 81 $ 65 $ 64 $ 64
EBITDA (3)................................... (17,653) (25,443) (59,710) (75,397) (54,125) (12,733) (8,239)
Depreciation and amortization................ 7,459 4,541 11,568 45,496 44,535 10,463 10,689
Capital expenditures ........................ 64,044 50,762 83,776 14,054 8,598 1,126 3,574
Ratio of earnings to fixed charges (4)....... -- -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
AS OF
MARCH 31, 1998(5)
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................................................. $ 21,279
Property and equipment, net (6)....................................................... 280,894
Total assets.......................................................................... 585,856
Total debt............................................................................ 365,706
Total stockholders' equity............................................................ 181,374
</TABLE>
- --------------------
(1) Includes interest expense on inter-company loans between Holdings and
American Mobile in the amount of $2.4 million in 1995, $29.5 million in
1996, $29.5 million in 1997, $7.3 million for the three months ended March
31, 1997, and $7.2 million for the three months ended March 31, 1998.
(2) Prior to 1996, American Mobile was a development stage company and leased
satellite capacity primarily on a pass-through basis. As such, subscriber
information is not available for periods prior to 1996. Average monthly
revenue per unit for the year ended December 31, 1996 was calculated on an
average monthly basis after adjusting both subscribers and revenues to
normalize for the acquisition, in late 1996, of MCSS.
(3) EBITDA consists of operating income plus depreciation and amortization.
EBITDA is a financial measure commonly used in the Company's industry and
should not be construed as an alternative to operating income (as
determined in accordance with GAAP) or as a measure of liquidity. EBITDA
does not represent funds available for dividends, reinvestment or other
discretionary activities. EBITDA for the three months ending March 31, 1997
and the year ending December 31, 1997 have been adjusted to include
$875,000 of other income from the licensing of certain technology.
(4) For purposes of calculating the ratio of earnings to fixed charges,
earnings are defined as loss before income taxes and extraordinary items
plus fixed charges. Fixed charges consist of interest expense, amortization
of debt issuance costs, accretion of discount on preferred stock and a
reasonable approximation of the interest factor included in rental payment
on operating leases. Earnings were inadequate to cover fixed charges for
the years ended December 31, 1993, 1994, 1995, 1996 and 1997 by $47.3
million, $42.1 million, $99.1 million, $165.0 million, and $150.0 million,
respectively, and for the three months ended March 31, 1997 and 1998 by
$34.7 million and $32.6 million, respectively.
(5) As a result of the Acquisition on March 31, 1998, all Balance Sheet Data
includes ARDIS.
(6) Includes capitalized interest in the amount of $22.4 million, $12.9
million, and $25.7 million in 1993, 1994 and 1995, respectively.
16
<PAGE>
ARDIS
SUMMARY COMBINED FINANCIAL AND OTHER DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------ --------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT SUBSCRIBERS AND REVENUE PER UNIT)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Services...................... $ 43,831 $ 48,561 $ 40,006 $ 43,413 $ 41,923 $10,598 $ 9,541
Equipment and consulting...... 2,773 2,346 1,266 1,884 2,326 327 530
-------- -------- -------- -------- -------- --------- ---------
Total revenue................. 46,604 50,907 41,272 45,297 44,249 10,925 10,071
Operating loss................. (40,704) (22,831) (40,632) (29,168) (17,368) (2,933) (4,645)
Net loss....................... (40,446) (22,504) (25,253) (18,998) (11,742) (2,120) (3,220)
OTHER FINANCIAL AND OPERATING
DATA:
Number of subscribers (end of
period)....................... 24,800 33,100 44,200 52,500 55,400 54,600 57,600
Average monthly revenue per
unit ......................... $ 150 $ 140 $ 86 $ 75 $ 65 $ 66 $ 56
EBITDA (1)..................... (32,816) (12,733) (26,277) (11,899) (2,782) 647 (1,354)
Depreciation and amortization.. 7,888 10,098 14,355 17,269 14,586 3,580 3,291
Capital expenditures........... 17,966 17,303 42,366 4,806 1,736 655 1,317
Ratio of earnings to fixed
charges (2)................... -- -- -- -- -- -- --
</TABLE>
- --------------------
(1) EBITDA consists of operating income plus depreciation and amortization.
EBITDA is a financial measure commonly used in the company's industry and
should not be construed as an alternative to operating income (as
determined in accordance with GAAP) or as a measure of liquidity. EBITDA
does not represent funds available for dividends, reinvestment or other
discretionary activities. EBITDA for 1993 includes a non-recurring charge
in the amount of $20.4 million relating to the write-off of previously
capitalized software development costs.
(2) For purposes of calculating the ratio of fixed charges, earnings are
defined as loss before income taxes and extraordinary items plus fixed
charges. Fixed charges consist of interest expense, amortization of debt
issuance costs, accretion of discount on preferred stock and a reasonable
approximation of the interest factor included in rental payment on
operating leases. Earnings were inadequate to cover fixed charges for the
years ended December 31, 1993, 1994, 1995, 1996 and 1997 by $40.4 million,
$22.5 million, $40.8 million, $30.5 million and $18.5 million,
respectively, and for the three months ended March 31, 1997 and 1998 by
$3.3 million and $4.9 million, respectively.
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<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus, the
following risk factors should be considered carefully in evaluating the
Company and Holdings and their business in connection with the Exchange Offer.
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act of 1934,
as amended (the "Exchange Act"). Although the Company believes that its plans,
intentions and expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such plans, intentions or
expectations will be achieved. Important factors that could cause actual
results to differ materially from the Company's forward-looking statements are
set forth below and elsewhere in this Prospectus. All forward-looking
statements attributable to the Company, Holdings or persons acting on its
behalf are expressly qualified in their entirety by the cautionary statements
set forth below.
SUBSTANTIAL AND CONTINUING OPERATING LOSSES
Each of American Mobile and ARDIS has incurred significant operating losses
and negative cash flows in each year since it commenced operations, due
primarily to start-up costs, the costs of developing and building each network
and the cost of developing, selling and providing its respective products and
services. American Mobile has reported operating losses of approximately $18.9
million in the three months ended March 31, 1998 and $99.5 million, $120.9
million and $71.3 million in 1997, 1996 and 1995, respectively. ARDIS has
reported operating losses of approximately $4.6 million in the three months
ended March 31, 1998 and $17.4 million, $29.2 million, and $40.6 million in
1997, 1996 and 1995, respectively.
Since inception, American Mobile has been engaged in the operation of its
business, the recruitment of key management and technical personnel and
raising capital to fund its operations and the development of the satellite
and associated network. American Mobile launched commercial service in January
1996. Accordingly, it has a short operating history upon which an evaluation
of its prospects in each of its markets can be made. The prospects for the
Company's success must be considered in light of the risks, expenses and
difficulties often encountered in the establishment of a new business in a
continually evolving industry subject to rapid technological and price
changes, and characterized by an increasing number of market competitors. See
"Business."
The Company, on a pro forma basis, had an operating loss of approximately
$24.1 million for the three months ended March 31, 1998. The Company estimates
that, absent the successful leasing of its MSAT-2 satellite, operating
revenues will not be sufficient to cover operating expenses for the
foreseeable future. Even with the leasing of MSAT-2, the ability of the
Company to generate positive operating cash flow will depend upon, among other
factors, the success of the Acquisition and the successful marketing of the
Company's services, as to which there can be no assurance.
In addition, further development of the Company's business and the expansion
of its networks will require additional capital and other expenditures and the
Company expects that it will have significant operating losses and will record
significant net cash outflow in the near term. A substantial portion of the
proceeds from the Units Offering will be utilized to fund working capital,
operating losses and capital expenditures. There can be no assurance that the
Company will have sufficient resources to complete such expenditures and make
principal or interest payments with respect to the Notes.
SUBSTANTIAL LEVERAGE
The Company is highly leveraged. As of March 31, 1998, the Company on a
consolidated basis had total indebtedness of approximately $374.2 million
($365.7 million net of debt discount) and had availability of $100.0 million
under the Company's Revolving Credit Facility. The Company also has received a
commitment from Motorola for up to $10.0 million of vendor financing of
certain capital expenditures (the "Vendor Financing Commitment"). The
Company's earnings would have been insufficient to cover its fixed charges by
approximately $165.2 million and $36.1 million for the year ended December 31,
1997 and the three months ended March 31, 1998, respectively, and at March 31,
1998 the Company's stockholders' equity was
18
<PAGE>
approximately $181.4 million. The Company and its subsidiaries will be
permitted to incur additional indebtedness in the future. Further, commencing
April 1, 2001 (three years after the date of the Indenture), the Company will
be permitted to pay dividends to Holdings to permit Holdings to meet its
interest expense obligations with respect to the Term Loan Facility. See
"Capitalization," "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources," "Selected
Financial and Operating Data" and "Description of the Exchange Notes."
American Mobile historically has not generated sufficient earnings or cash
flow from operations to make such interest payments. Accordingly, the Company
expects that it will be necessary for its operating results to improve
significantly in order to permit it to meet the debt service obligations under
the Notes beyond the period for which the payment of interest on the Notes is
provided for through the Pledged Securities. The ability of the Company to
improve its operating results will depend upon a variety of factors, including
economic, financial, competitive, regulatory and other factors beyond its
control. There can be no assurance that the Company will generate sufficient
earnings or cash flow from operations in the future to service the Notes and
to meet its working capital, capital expenditure and other requirements. If
the Company is unable to service the Notes using earnings or cash flow from
operations, it will have to examine alternate means of repayment that could
include restructuring or refinancing its indebtedness or seeking additional
sources of debt or equity financing. There can be no assurance, however, that
the Indenture or the New Bank Financing would permit the Company to pursue
alternative means of repayment or that the Company would be able to effect
such a restructuring or refinancing or obtain such additional financing if
permitted to do so. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."
In addition, Holdings is highly leveraged. On March 31, 1998, Holdings had
total indebtedness of approximately $465.7 million and stockholders' equity of
approximately $81.0 million. Also after giving effect to the Units Offering,
Holdings' earnings have been insufficient to cover its fixed charges by
approximately $176.3 million and $38.9 million for fiscal 1997 and for the
three months ended March 31, 1998, respectively. Holdings will not be subject
to any of the covenants or restrictions under the Indenture governing the
Notes. Accordingly, the Indenture will not restrict Holdings' ability to incur
additional indebtedness and issue preferred stock, pay dividends or make
certain other payments, enter into transactions with affiliates, make certain
asset dispositions, merge or consolidate with, or transfer substantially all
of its assets to, another person, encumber assets, or engage in certain
business activities.
The degree to which the Company and Holdings are leveraged following the
Units Offering could have important consequences to holders of the Notes,
including, but not limited to: (i) making it more difficult for the Company to
satisfy its obligations with respect to the Notes, (ii) increasing the
Company's vulnerability to general adverse economic and industry conditions,
(iii) limiting the Company's ability to obtain additional financing to fund
future working capital, capital expenditures, research and development and
other general corporate requirements, (iv) requiring the dedication of a
substantial portion of the Company's cash flow from operations to the payment
of principal of, and interest on, its indebtedness, thereby reducing the
availability of such cash flow to fund working capital, capital expenditures,
research and development or other general corporate purposes, (v) limiting the
Company's flexibility in planning for, or reacting to, changes in its business
and the industry, and (vi) placing the Company at a competitive disadvantage
vis-a-vis less leveraged competitors. In addition, the Indenture and the New
Bank Financing will contain financial and other restrictive covenants that
will limit the ability of the Company to, among other things, borrow
additional funds. Failure by the Company to comply with such covenants could
result in an event of default which, if not cured or waived, could have a
material adverse effect on the Company. In addition, the degree to which the
Company is leveraged could prevent it from repurchasing all of the Notes
tendered to it upon the occurrence of a Change of Control. See "Description of
the Exchange Notes--Repurchase at the Option of Holders--Change of Control"
and "Description of New Bank Financing."
LIQUIDITY; NEED FOR ADDITIONAL CAPITAL
The Company expects to continue to make significant capital outlays for the
foreseeable future to fund interest expense, capital expenditures and working
capital prior to the time that it begins to generate positive
19
<PAGE>
cash flow from operations and for the foreseeable future thereafter. The
Company currently believes that the net proceeds of the Units Offering,
together with borrowings under the New Bank Financing and the Vendor Financing
Commitment, will be sufficient to meet the Company's currently anticipated
capital expenditures, operating losses, working capital and debt service
requirements through the time it generates positive operating cash flow and
thereafter. However, if the Company's cash flows from operations are less than
projected, the Company will require additional debt or equity financing in
amounts that could be substantial. The type, timing and terms of financing
selected by the Company will be dependent upon the Company's cash needs, the
availability of other financing sources and the prevailing conditions in the
financial markets. There can be no assurance that any such sources will be
available to the Company at any given time or as to the favorableness of the
terms on which such sources may be available. The Vendor Financing Commitment
is subject to customary conditions, including due diligence, and there can be
no assurance that the facility will be obtained by the Company on these terms
or at all. Further, there can be no assurance that there will be a final
agreement on favorable terms, or at all, with respect to the Vendor Financing
Commitment or any other vendor financing or that, once finalized, the Company
will meet the conditions therein to funding. See "Management's Discussion and
Analysis of Operations--Liquidity and Capital Resources." There can also be no
assurance that the Company's current projection of cash flow from operations
(which will depend upon numerous future factors and conditions, many of which
are outside of the Company's control) will be accurate. Projections are merely
estimates of future events and actual events should be expected to vary from
current estimates, possibly materially. In addition, if customer demand
exceeds current expectations and if such demand can be accommodated without
adversely affecting the quality of the Company's service, the Company is
likely to attempt to accelerate its expansion. If the Company elects to
accelerate its build-out or introduce new products or services, its funding
needs will increase, possibly to a significant degree. There can be no
assurance that any additional financing will be available to the Company on
commercially reasonable terms or at all. Because the Company's cost of
expanding its network and operating its business, as well as the Company's
revenues, will depend on a variety of factors (including the ability of the
Company to meet its expansion schedules, the number of customers and the
services for which they subscribe, the nature and penetration of new services
that may be offered by the Company and its competitors, regulatory changes and
changes in technology) actual costs and revenues may vary from expected
amounts, possibly to a material degree, and such variations are likely to
affect the Company's future capital requirements. Accordingly, there can be no
assurance that the Company will not be required to raise substantial
additional capital in the future or that its current projections will prove to
be accurate. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business--Market Opportunity," "--Business
Strategy," "--Products and Services," "--Competition;" and "Regulation."
HOLDINGS' GUARANTEE
The Guarantee of Holdings is subordinated in right of payment to all
existing and future Indebtedness of Holdings, including borrowings under the
Holdings Term Loan Facility. In the event of bankruptcy, liquidation, or
reorganization of Holdings, the assets of Holdings will be available to pay
obligations on the Guarantee of Holdings only after all senior Indebtedness
has been paid in full, and there may not be sufficient assets remaining to pay
amounts due on the Guarantee of Holdings. In addition, under certain
circumstances Holdings will not be permitted to pay its obligations under its
Guarantee in the event of a default under any or all senior Indebtedness. As
of March 31, 1998, on a stand-alone basis Holdings had $100.0 million of
Indebtedness effectively ranking senior to the Guarantee of Holdings.
Holdings will not be subject to any of the covenants or restrictions under
the Indenture governing the Notes. Accordingly, the Indenture will not
restrict Holdings' ability to incur additional Indebtedness and issue
preferred stock, pay dividends or make certain other payments, enter into
transactions with affiliates, make certain asset dispositions, merge or
consolidate with, or transfer substantially all of its assets to, another
person, encumber assets, or engage in certain business activities. If the
Company were to default on its obligations to pay amounts payable under the
Notes, Holdings may lack funds for payment of such amounts, and, in such
event, holders of the Notes would not be able to rely upon the Guarantee for
payment of such amounts. See "Description of New Bank Financing."
20
<PAGE>
NECESSARY BUILDOUTS
On June 5, 1996, the FCC granted ARDIS extensions of time to complete the
buildouts of 190 antenna sites, as required to maintain previously granted
licenses. As of February 1998, approximately 104 of the sites remain to be
constructed by expiration dates that range between June 27, 1998 to March 31,
1999. Management estimates that $5.2 million will be necessary to achieve
timely buildouts of the network, including $5.0 million in 1998. Failure to
obtain such capital or to complete the buildouts in a timely manner could
result in loss of licenses for such sites from the FCC, loss of customers, as
well as the incurrence of penalties under the UPS Contract, which would have a
material adverse effect on the Company. See "--Liquidity; Need for Additional
Capital," "--UPS Contract," "--Customer Concentration" and "Management's
Discussion and Analysis of Financial Condition and Results of Operation--
Liquidity and Capital Resources."
RAPIDLY CHANGING MARKET
The markets for wireless communications services are characterized by rapid
technological and other changes. The Company's success depends, in part, on
its ability to respond and adapt to such changes. There can be no assurance
that the Company will be able to compete effectively under, or adjust its
contemplated plan of development to meet, changing market conditions or that
the Company will be able to implement its strategy or that its strategy will
be successful in this rapidly evolving market.
This market is also marked by the introduction of new products and services
and increased capacity for services similar to those provided by the Company.
Future technological advances in the wireless communications industry may
result in the availability of new products or services (or increase the
efficiency of existing products or services). If a technology becomes
available that is more cost-effective or creates a superior product, the
Company may be unable to access such technology or its use may involve
substantial capital expenditures that the Company may be unable to finance.
There can be no assurance that existing proposed or as yet undeveloped
technologies will not render the Company's technology less profitable or less
viable, or that the Company will have available the financial and other
resources to compete effectively against companies possessing such
technologies. The Company is unable to predict which of the many possible
future products and services will meet evolving industry standards and
consumer demands. There can be no assurance that the Company will be able to
adapt to such technological changes or offer such products or services on a
timely basis or establish or maintain a competitive position.
DEPENDENCE ON MARKET ACCEPTANCE
The Company's success is subject to a number of business, economic,
regulatory and competitive factors, many of which are beyond the Company's
control, including the extent to which prospective customers will purchase the
Company's service. The Company's ability to service its Indebtedness,
including the Notes, is subject to the successful implementation of its growth
strategy, which, in turn, is premised, among other things, on the Company's
expectation that demand for its services will increase significantly in its
markets. Certain of these services have not yet been commercially introduced
and there can be no assurance that any of them will achieve market acceptance
or result in the generation of operating cash flow. Failure to gain market
acceptance for current or planned products and services would have a material
adverse effect on the Company. In addition, the Company has incurred and will
continue to incur significant operating expenses, has made, and will continue
to make, significant capital investments, has entered into operating leases,
equipment supply contracts and service arrangements, and is attempting to
secure financing, in each case based upon certain expectations as to the
anticipated market acceptance of, and customer demand for, the Company's
services. Accordingly, any material miscalculation by the Company with respect
to its operating strategy or business plan could have a material adverse
effect on the Company.
CHALLENGES OF BUSINESS INTEGRATION
The full benefits of a combination of American Mobile and ARDIS as a result
of the Acquisition will require the integration of each company's
administrative, finance, sales and marketing organizations, the coordination
of
21
<PAGE>
each company's sales efforts and the implementation of appropriate
operational, financial and management systems and controls. This will require
substantial attention from the senior management teams of American Mobile and
ARDIS, who have limited experience integrating the operations of companies of
the size of American Mobile and ARDIS and whose members have not worked
together previously as one team. The diversion of management attention, as
well as any other difficulties that may be encountered in the transition and
integration process, could have a material adverse effect on the revenues and
operating results of the Company. In addition, American Mobile and ARDIS
provide similar services to certain shared customers, requiring the Company to
integrate the services provided to these shared customers. If the contemplated
organizational changes are not properly managed, there could be an adverse
effect on the Company's results of operations. There can be no assurance that
the Company will be able to integrate the operations of American Mobile and
the ARDIS network successfully or, if successful, that such integration will
yield the expected benefits to the Company or will not materially adversely
affect the Company's business, financial condition or results of operations.
The Company's prospects should be considered in light of the numerous risks
commonly encountered in business combinations. The historical financial
statements presented in this Prospectus may not necessarily be indicative of
the results that would have been attained had the Company operated on a
combined basis and as an independent entity.
MANAGEMENT OF GROWTH
In its continuing efforts to respond to changing market conditions, the
Company may experience periods of rapid expansion. In order to manage growth
effectively in the complex environment in which it operates, the Company will
need to maintain and improve its operating and financial systems and expand,
train and manage its employee base. The Company must expand the capacity of
its sales, distribution and installation networks in order to achieve
continued growth in its existing and future markets. In general, the failure
to manage growth effectively could have a material adverse effect on the
Company's business, financial condition and results of operations.
UPS CONTRACT
ARDIS has entered into a contract with UPS for the use of the ARDIS network
pursuant to which the Company anticipates providing communication services for
approximately 50,000 UPS units by the end of 2000. However, performance under
the UPS Contract is subject to certain significant conditions, including,
among others, (i) required capital expenditures by the Company to expand
capacity of the ARDIS network in certain areas, (ii) successful development of
the DIAD III device by Motorola and (iii) successful deployment of the DIAD
III devices on the ARDIS network within strict guaranteed operational
performance levels. Management believes that the Company will be required to
incur capital spending of approximately $17.4 million in connection with the
UPS Contract over the next three years. In addition, the contract represents a
significant implementation effort of a magnitude in excess of that of any
existing ARDIS customer. Failure to meet the requirements under the UPS
Contract could result in a loss of the contract as well as monetary penalties
that could materially adversely affect the Company. See "Business--Customers."
Under the UPS Contract, the Company also has significant warranties of
performance, both during the implementation phase and for ongoing network
performance. During the implementation phase, the Company must meet key
checkpoints and milestones culminating in an acceptance test. Failure of the
acceptance test could result, after a cure period, in the loss of the
contract. In addition, the Company will have to construct network capacity in
several key cities. Failure to complete such construction by the committed
dates would subject the Company to monthly penalties until compliance is
achieved.
On an ongoing basis, the UPS Contract requires that the Company guarantee
network performance levels. If network availability drops below 99%, the
Company will be subject to an initial penalty of 2% of the average monthly use
of the service, calculated as the average of the last three months in the
affected area. The penalty increases if performance levels further drop.
22
<PAGE>
As a part of the negotiations leading to the signing of the UPS Contract,
Motorola issued a performance guarantee regarding the network's performance.
In connection with the Acquisition, the Company agreed to indemnify Motorola
for up to $10.0 million in connection with such performance guarantee (the
"UPS Guarantee"). In order to satisfy any such obligation, the Company has
deposited $10.0 million of the proceeds from the Units Offering into an escrow
account, such escrow account having the same three-year term (with two
possible one-year renewals) as the UPS Contract.
CUSTOMER CONCENTRATION
After giving effect to the Acquisition, IBM, NCR and Pitney Bowes accounted
for 26%, 7% and 5%, respectively, of the Company's recurring service revenue
for the twelve months ended December 31, 1997. The loss of one or more of such
customers, or any event, occurrence or development which adversely affects the
relationship between the Company and such customer could have a material
adverse effect upon the Company.
RELIANCE ON THIRD PARTY VENDORS
The Company relies on independent third-party vendors to develop and
manufacture wireless communications devices for its networks, which are
significant elements of the Company's business plan. See "Business--Equipment;
Supplier Relationships." These suppliers do not sell such devices to the
Company on an exclusive basis. The Company carries a limited inventory of such
devices and generally has no guaranteed supply arrangements. The Company has
from time to time experienced interruptions and/or delays of supply and there
can be no assurance that the Company will not experience such interruptions in
the future. In addition, the Company's contracts with the majority of its
suppliers are short-term contracts. There can be no assurance that such
suppliers will continue to provide products to the Company at attractive
prices, or at all, or that the Company will be able to obtain such products in
the future from these or other providers on the scale and within the time
frames required by the Company. Further, there can be no assurance that any of
the Company's suppliers will not enter into exclusive arrangements with the
Company's competitors, or cease selling these components to the Company at
commercially reasonable prices, or at all. Any failure to obtain such products
on a timely basis at an affordable cost, or any significant delays or
interruptions of supply, would have a material adverse effect on the Company.
Further, as part of its growth strategy, the Company is relying on its
suppliers to reduce the cost of wireless communications devices approved and
available for use on its network. Management believes that reductions in the
cost of wireless communications devices will result in increased sales of
devices, additional subscribers for the Company's services and a corresponding
increase in the Company's service revenues. Any failure to obtain such cost
reductions on a timely basis, or any significant delays of such reductions,
would have a material adverse effect on the Company.
In addition, the anticipated expansion of the Company's operations and
infrastructure is expected to place a significant demand on the Company's
suppliers, some of which have limited resources and production capacity. In
addition, certain of the Company's suppliers, in turn, rely on sole or limited
sources of supply for components included in their products. Failure of the
Company's suppliers to adjust to meet such increasing demand may prevent them
from continuing to supply devices in the quantities and the quality and at the
times required by the Company, or at all. The Company's inability to obtain
sufficient quantities of sole or limited source devices or to develop
alternative sources if required could result in delays and increased costs in
the expansion of the Company's operations and infrastructure or the inability
of the Company to properly maintain its existing level of operations. Such
occurrences would have a material adverse effect on the Company's business,
financial condition and results of operations.
ARDIS TECHNOLOGY RISKS
The ARDIS network, and certain of its competitive strengths such as deep in-
building penetration, is based upon a single frequency reuse ("SFR")
technology. Motorola holds the patent for SFR technology. ARDIS has entered
into support agreements with Motorola to provide for certain support of the
operations of the ARDIS
23
<PAGE>
network. See "The Acquisition." However, there can be no assurance that
Motorola will not enter into arrangements with the Company's competitors, or
that if it does, such arrangements would not have a material adverse effect on
the Company. In addition, the construction of additional network sites may
disclose the existence of interfering facilities operated by other licensees
that were not apparent in the design and licensing of the ARDIS facilities. To
the extent that is the case, ARDIS may be required either to pay the operators
of those interfering facilities to cease operations or to abandon operation of
interfering facilities.
SATELLITE TECHNOLOGY RISKS
The Company presently has an agreement with TMI, the Canadian mobile
satellite licensee, for reciprocal backup, restoral and excess capacity usage
("Backup Capacity") on the other party's satellite in the event of a satellite
failure or a need for excess capacity. On December 4, 1997, the Company
entered into the Satellite Lease Agreement with ACTEL to lease MSAT-2 for
deployment over sub-Saharan Africa and, simultaneously, entered into the
Satellite Purchase Agreement with TMI to acquire a one-half ownership interest
in TMI's satellite, MSAT-1. See "Prospectus Summary--Recent Developments." In
the event that the lease and deployment is consummated, the Company will no
longer have available Backup Capacity from MSAT-1, which may reduce the
marketability of the Company's services, since certain services such as voice
dispatch can only be provided by the MSAT-1 or MSAT-2 satellites. Each of
MSAT-2 and MSAT-1 has in the past experienced certain technological anomalies,
most recently with respect to MSAT-2 in January 1998. While recent anomalies
have involved either spare components or ones which have not had a material
impact on the Company, there can be no assurance that either of the satellites
will not experience subsequent anomalies that could adversely affect the
Company's financial condition, results of operations and cash flows. In the
event that MSAT-1 experiences anomalies of this type or other types at a time
when the Company has no back-up capacity, there would be a material adverse
effect on the Company.
MSAT-2 has an expected remaining service life of approximately eight years
and the expected remaining life of MSAT-1 is approximately ten years. This
expected remaining service life of each satellite may be affected by a number
of factors. For example, random failure of satellite components could result
in damage to or loss of MSAT-2 or MSAT-1. It is also possible that either
satellite could be damaged by electromagnetic storms or collisions with other
objects, although such occurrences are rare. Although the Company believes
that the actual service lives of both satellites may exceed their expected
service lives, there can be no assurance that MSAT-2's or MSAT-1's expected
service life will be exceeded or achieved. Although the Company has obtained
in-orbit insurance against a failure of MSAT-2, it is unlikely that any
recovery under such insurance would fully compensate the Company for losses it
would sustain in such event. At present, there is no insurance policy in
effect for MSAT-1. Although there can be no assurance, the Company believes
that it will be able to obtain insurance with respect to its interest in MSAT-
1 in connection with the Satellite Purchase Agreement on terms substantially
similar to those presently in effect for MSAT-2. In addition, the orbit
insurance policy is subject to annual renewal, and there is no assurance that
insurance on favorable terms and at commercially reasonable rates will remain
available for coverage of MSAT-2, or be available for coverage of MSAT-1.
In the event that, following the satellite lease, MSAT-1 ceases to operate,
the Company would have several options to replace the lost capacity, through
the lease or purchase of capacity on certain Inmarsat satellites, or the
launch of a new satellite. However, each of these options would require
substantial lead-time and significant financing. As a result, any such delay
or need for significant funds would result in a material adverse effect on the
Company.
SATELLITE LEASE AND PURCHASE AGREEMENT RISKS
The five-year Satellite Lease Agreement provides for aggregate lease
payments to the Company of $182.5 million. The Satellite Lease Agreement
includes a renewal option, at the lessee's election, through the end of the
life of MSAT-2, on the same terms, exercisable two and one-half years prior to
the end of the initial lease term. The Satellite Purchase Agreement
contemplates Holdings' one-half ownership acquisition at a cost of $60.0
million payable in equal installments over a five-year period; certain
additional payments to TMI of up to one-
24
<PAGE>
half of additional net payments received are contemplated in the event that
additional benefits are realized by Holdings with respect to MSAT-2 after the
initial lease term. Under the Satellite Purchase Agreement, TMI and Holdings
will each own a 50% undivided ownership interest in MSAT-1, will be jointly
responsible for the operation of MSAT-1, and will share certain satellite
operating expenses, but will otherwise maintain their separate business
operations.
The Satellite Purchase Agreement and Satellite Lease Agreement are separate
transactions and reflect separate sets of obligations for the Company. As a
result, it is possible, under certain circumstances, that the Company would
remain obligated to make or continue payments under the Satellite Purchase
Agreement to TMI without receipt from the lessee of anticipated payments under
the Satellite Lease Agreement, principally by virtue of a default of ACTEL.
While the Company believes that if ACTEL defaults under the Satellite Lease
Agreement, the Company would be able to achieve the return of MSAT-2 from
ACTEL to its operation in the United States and terminate its payment
obligations to TMI under the Satellite Purchase Agreement, there can be no
assurances that such actions can be achieved. In addition, there can be no
assurances that the agreements will operate in parallel, or that the Company
will not be met with certain completion or transactional risks under the
Satellite Lease Agreement. If it is necessary for the Company to make payments
under the Satellite Purchase Agreement at a time when it is not receiving
payments under the Satellite Lease Agreement, the Company would be materially
and adversely affected.
Closing under the Satellite Purchase Agreement and Satellite Lease Agreement
is subject to a number of conditions, including: a successful financing by
ACTEL of at least $120 million; completion of certain satellite testing,
inversion and relocation activities with respect to American Mobile's
satellite, to support the contemplated services over Africa; receipt of
various government authorizations from Gibraltar, South Africa and other
jurisdictions to support satellite relocation, including authorizations with
respect to orbital slot and spectrum coordination; and completion of certain
system development activities sufficient to support satellite redeployment. It
is anticipated that the closing under both agreements will occur
simultaneously in the third quarter of 1998. While it is anticipated that
these transactions would improve the leverage of and provide additional
liquidity to the Company, there can be no assurance that such transactions
will be consummated simultaneously, or at all.
LIMITATION ON REMOTE DISASTER RECOVERY SYSTEM FOR GROUND SEGMENT OF SATELLITE
NETWORK
At the present time, the Company's disaster recovery systems focus on
internal redundancy and diverse routing within each of the complexes operated
by or for the Company. However, the Company does not currently have access to
a remote backup complex that would enable it to continue to provide mobile
satellite communications services to customers in the event of a natural
disaster or other occurrence that rendered the system unavailable.
Accordingly, the Company's business is subject to the risk that such a
disaster or other occurrence could hinder or prevent the Company from
continuing to provide services to some or all of its customers. ARDIS,
however, does have access to a remote backup complex that would enable it to
continue to provide its services in such circumstances.
COMPETITION
The wireless communications industry is highly competitive and is
characterized by frequent technological innovation. The industry includes
major domestic and international companies, many of which have financial,
technical, marketing, sales, distribution and other resources substantially
greater than those of the Company and which provide, or plan to provide, a
wider range of services than will be provided the Company. The Company's
products and services compete with a number of communications services,
including existing satellite services, terrestrial air-to-ground services, and
terrestrial land-mobile and fixed services, and may compete with new
technologies in the future. In addition, the FCC has recently allocated large
amounts of additional spectrum for communications uses or potential uses that
could compete with the Company, and additional allocations of spectrum for
such uses may occur in the future. See "Business--Competition."
25
<PAGE>
REGULATORY RISKS
The ownership and operations of the Company's communication systems are
subject to significant regulation by the FCC, which acts under authority
granted by the Communications Act of 1934, as amended (the "Communications
Act"), and related federal laws. A number of the Company's licenses are
subject to renewal by the FCC and, with respect to the Company's satellite
operations, are subject to international frequency coordination. In addition,
current FCC regulations generally limit the ownership and control of Holdings
by non-U.S. citizens or entities to 25%. There can be no assurances that the
rules and regulations of the FCC will continue to support the Company's
operations as presently conducted and contemplated to be conducted in the
future, or that all existing licenses will be renewed and requisite
frequencies coordinated. See "Regulation."
YEAR 2000 COMPLIANCE
The Company has implemented a Year 2000 program to ensure that the Company's
computer systems and applications will function properly beyond 1998. The
Company believes that it has allocated adequate resources for this purpose and
expects its Year 2000 data conversion program to be successfully completed on
a timely basis. There can, however, be no assurance that this will be the
case. The Company does not expect to incur significant expenditures to address
this issue. The ability of third parties with whom the Company transacts
business to adequately address their Year 2000 issues is outside of the
Company's control. There can be no assurance that the failure of the Company
or such third parties to adequately address their respective Year 2000 issues
will not have a material adverse effect on the Company's business, financial
condition, cash flows and results of the operations.
CONTROL BY PRINCIPAL STOCKHOLDERS
Holdings' principal stockholders following the consummation of the
Acquisition are Hughes, Motorola, Baron Capital, Inc., Singapore Telecom and
AT&T Wireless, who hold in aggregate approximately 75.5% of the Common Stock
of Holdings on a fully diluted basis. Holdings has entered into material
contracts and transactions with its principal stockholders or their affiliates
and may enter into additional contracts in the future, including in some
instances the guarantee of debt obligations of the Company and Holdings. See
"Certain Relationships and Related Party Transactions." Those stockholders
have other interests in the communications industry that may conflict with the
Company's interests.
DEPENDENCE ON KEY PERSONNEL
The Company is dependent on the efforts of a group of employees with
technical and business knowledge regarding Holdings' and the Company's
systems. The loss of services of one or more of these individuals could
materially and adversely affect the business of Holdings and the Company and
their future prospects. The Company does not maintain key man life insurance
on any of the Company officers or employees. Holdings' and the Company's
future success will also depend on their ability to attract and retain
additional management and technical personnel required in connection with the
growth and development of their businesses. Failure by the Company to retain
or attract such key personnel could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Management."
POSSIBLE INABILITY TO FUND A CHANGE OF CONTROL
Upon a Change of Control, the Company will be required to offer to
repurchase all of the outstanding Notes at a price equal to 101% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of repurchase. There can be no assurance that the
Company would have sufficient resources to repurchase the Notes upon the
occurrence of a Change of Control. The failure to repurchase all of the Notes
tendered to the Company would constitute an Event of Default under the
Indenture. Furthermore, the repurchase of the Notes by the Company upon a
Change of Control might result in a default on the part of the Company in
respect of other future indebtedness of the Company, as a result of the
financial effect of such repurchase on the Company or otherwise. The Change of
Control repurchase feature of the Notes may have anti-
26
<PAGE>
takeover effects and may delay, defer or prevent a merger, tender offer or
other takeover attempt. Notwithstanding these provisions, the Company could
enter into certain transactions, including certain recapitalizations, that
would not constitute a Change of Control but would increase the amount of debt
outstanding at such time. See "Description of the Exchange Notes--Repurchase
at the Option of Holders."
FRAUDULENT CONVEYANCE CONSIDERATIONS
Under applicable provisions of federal bankruptcy law or comparable
provisions of state fraudulent transfer law, if, among other things, the
Company or any Guarantor, at the time it incurred the indebtedness evidenced
by the Notes or its Note Guarantee (i) (a) was or is insolvent or rendered
insolvent by reason of such occurrence or (b) was or is engaged in a business
or transaction for which the assets remaining with the Company or such
Guarantor constituted unreasonably small capital or (c) intended or intends to
incur, or believed or believes that it would incur, debts beyond its ability
to pay such debts as they mature, and (ii) the Company, or such Guarantor
received or receives less than reasonably equivalent value or fair
consideration for the incurrence of such indebtedness, then the Notes and the
Note Guarantees, and any pledge or other security interest securing such
indebtedness, could be voided, or claims in respect of the Notes or the Note
Guarantees could he subordinated to all other debts of the Company or such
Guarantor, as the case may be. In addition, the payment of interest and
principal by the Company pursuant to the Notes or the payment of amounts by a
Guarantor pursuant to a Note Guarantee could be voided and required to be
returned to the person making such payment, or to a fund for the benefit of
the creditors of the Company or such Guarantor, as the case may be.
The measures of insolvency for purposes of the foregoing considerations will
vary depending upon the law applied in any proceeding with respect to the
foregoing. Generally, however, the Company or a Guarantor would be considered
insolvent if (i) the sum of its debts, including contingent liabilities, were
greater than the saleable value of all of its assets at a fair valuation or if
the present fair saleable value of its assets were less than the amount that
would be required to pay its probable liability on its existing debts,
including contingent liabilities, as they become absolute and mature or (ii)
it could not pay its debts as they become due.
The Company has no operations of its own and derives substantially all of
its revenue from its subsidiaries. If the Note Guarantees were voided, the
holders of indebtedness of, and trade creditors of, subsidiaries of the
Company would generally be entitled to payment of their claims from the assets
of the affected subsidiaries before such assets were made available for
distribution to the Company. In the event of a bankruptcy, liquidation or
reorganization of a subsidiary, holders of any of such subsidiary's
indebtedness will have a claim to the assets of the subsidiary that is prior
to the Company's interest in those assets. If any subsidiary indebtedness were
to be accelerated, there can be no assurance that the assets of such
subsidiary would be sufficient to repay such indebtedness or that the assets
of the Company and of the other subsidiaries would be sufficient to repay in
full the indebtedness of the Company, including the Notes.
On the basis of historical financial information, recent operating history
and other factors, the Company and each Guarantor believes that, after giving
effect to the indebtedness incurred in connection with the Units Offering, it
will not be insolvent, will not have unreasonably small capital for the
business in which it is engaged and will not incur debts beyond its ability to
pay such debts as they mature. There can be no assurance, however, as to what
standard a court would apply in making such determinations or that a court
would agree with the Company's or the Guarantors' conclusions in this regard.
CERTAIN TAX CONSIDERATIONS
The Company has determined that the Old Notes were issued with original
issue discount ("OID") for United States federal income tax purposes in an
amount equal to the excess of the principal amount due at maturity on the Old
Notes over their "issue price" (as described in "Certain United States Federal
Income Tax Consequences--U.S. Holders--Original Issue Discount"). This OID
will carry over to, and be treated as OID on, the Exchange Notes received in
exchange for the Old Notes, and each United States holder of an Exchange Note
will be required to include in taxable income for any particular taxable year
a portion of such OID in advance of the receipt of the cash to which such OID
is attributable. For additional information regarding the
27
<PAGE>
OID associated with the Notes, as well as certain other federal income tax
considerations relevant to the exchange of Old Notes for Exchange Notes and
the ownership and depositor of Exchange Notes, see "Certain United States
Federal Income Tax Consequences."
RESTRICTIONS ON TRANSFER; ABSENCE OF A PUBLIC MARKET
Prior to the Exchange Offer, there has not been any public market for the
Old Notes. The Old Notes have not been registered under the Securities Act and
will be subject to restrictions on transferability to the extent that they are
not exchanged for Exchange Notes by holders who are entitled to participate in
the Exchange Offer. The holders of Old Notes (other than any such holder that
is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) who are not eligible to participate in the Exchange Offer are
entitled to certain registration rights, and the Company is required to file a
Shelf Registration Statement with respect to such Old Notes. TheExchange Notes
will constitute a new issue of securities with no established trading market.
The Exchange Notes will not be listed on any securities exchange and the
Company will not seek the admission thereof to trading in the National
Association of Securities Dealers Automated Quotation System. The Company has
been advised by the Initial Purchasers that they currently intend to make a
market in the Exchange Notes; however, they are not obligated to do so and any
such market-making may be discontinued at any time without notice. In
addition, such market-making activity will be subject to the limits imposed by
the Securities Act and the Exchange Act and may be limited during the Exchange
Offer and the pendency of any shelf registration statement. Therefore, there
can be no assurance as to the development or liquidity of any market for the
Exchange Notes. See "Description of the Notes--Registration Rights; Liquidated
Damages" and "Notice to Investors."
EXCHANGE OFFER PROCEDURES
Issuance of the Exchange Notes in exchange for the Old Notes pursuant to the
Exchange Offer will be made only after a timely receipt by the Company of such
Old Notes, a properly completed and duly executed Letter of Transmittal and
all other required documents. Therefore, holders of the Old Notes desiring to
tender such Old Notes in exchange for Exchange Notes should allow sufficient
time to ensure timely delivery. The Company is under no duty to give
notification of defects or irregularities with respect to the tenders of Old
Notes for exchange. Old Notes that are not tendered or are tendered but not
accepted will, following the consummation of the Exchange Offer, continue to
be subject to the existing restrictions upon transfer thereof and, upon
consummation of the Exchange Offer, registration rights under the Debt
Registration Rights Agreement generally will terminate. In addition, any
holder of Old Notes who tenders in the Exchange Offer for the purpose of
participating in a distribution of the Exchange Notes may be deemed to have
received restricted securities and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transactions. Each Participating Broker-Dealer that
receives Exchange Notes for its own account in exchange for Old Notes, where
such Old Notes were acquired by such Participating Broker-Dealer as a result
of market-making activities or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Notes. See "Plan of Distribution." To the extent that Old Notes are tendered
and accepted in the Exchange Offer, the trading market for untendered and
tendered but unaccepted Old Notes could be adversely affected. See "The
Exchange Offer."
28
<PAGE>
USE OF PROCEEDS
The gross proceeds to the Company and Holdings from the Units Offering were
$335.0 million. The Company has used or intends to use the proceeds as
follows: (i) approximately $113.0 million to fund the purchase of the Pledged
Securities; (ii) approximately $50.0 million to purchase ARDIS (see "The
Acquisition"); (iii) approximately $100.0 million to pay down the Bank
Financing (such amount will be available for borrowing under the Revolving
Credit Facility to fund general corporate purposes, including working capital
requirements, payment of deferred trade payables, operating losses and capital
expenditures expected to be incurred in connection with the continued growth
and development of the Company's business); (iv) approximately $17.9 million
to repay advances from Holdings, which funds are intended to provide for the
payment of Holdings' interest payments on the Term Loan Facility for three
years; (v) approximately $10.1 million to repay debt plus accrued interest
expected to be outstanding under the Bridge Facility, which bears interest at
12%, matures March 31, 1999 and requires prepayment in full from the proceeds
of the Units Offering; (vi) approximately $10.0 million to fund an escrow
account in connection with the UPS Guarantee obligations; (vii) approximately
$7.2 million to pay deferred obligations; and (viii) approximately $14.8
million to pay estimated fees and expenses in connection with the Acquisition,
the Offering and the New Bank Financing. The remaining net proceeds will be
used for working capital purposes.
CAPITALIZATION
The following table sets forth the cash and capitalization of the Company at
March 31, 1998. This table should be read in conjunction with the consolidated
financial statements of Holdings and of ARDIS and the related notes, the Pro
Forma Financial Information and other financial information included elsewhere
herein.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Cash, cash equivalents and restricted cash (1)........... $135,279
========
Debt, including current portion:
Bank Financing (2)..................................... $ --
12 1/4% Senior Notes (3)............................... 326,510
Other debt............................................. 39,196
--------
Total debt, including current portion................ 365,706
--------
Stockholders' equity (3)................................. 181,374
--------
Total capitalization............................... $547,080
========
</TABLE>
- ---------------------
(1) Restricted cash includes Pledged Securities of $113.0 million.
(2) It is expected that the Company will have an additional $100.0 million
available for borrowing under the Revolving Credit Facility and Holdings
will assume the obligation for the $100.0 million Term Loan Facility.
(3) Reflects a debt discount of $8.5 million that was allocated to the
Warrants associated with the issuance of Old Notes.
29
<PAGE>
SELECTED FINANCIAL AND OTHER DATA
The following selected historical financial information of American Mobile
and Holdings has been derived from Holdings' historical financial statements
and should be read in conjunction with such consolidated financial statements
and the notes thereto incorporated by reference into this Prospectus.
Holdings' Consolidated Financial Statements include the combined condensed
financial statements of American Mobile in Note 17 for the three year period
ended December 31, 1997. Holdings' Consolidated Financial Statements for each
of the five years in the period ended December 31, 1997 have been audited by
Arthur Andersen LLP, independent auditors.
The following historical selected financial information for ARDIS as of and
for each of the three years in the three-year period ended December 31, 1997
have been derived from the audited Combined Financial Statements of ARDIS,
which have been audited by KPMG Peat Marwick LLP, independent auditors, and
are incorporated by reference into this Prospectus.
Selected historical financial information for American Mobile for 1993 and
for ARDIS for 1993 and 1994 have been derived from the audited Consolidated
Financial Statements of Holdings and unaudited combined financial statements
of ARDIS, respectively. In the respective opinions of the management of
American Mobile and ARDIS, such unaudited selected financial statements have
been prepared on the same basis as the audited financial statements referred
to above and include all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation of the financial information for the periods
presented.
Selected historical financial information for American Mobile, Holdings and
ARDIS as of and for the three months ended March 31, 1997 and 1998 have been
derived from unaudited consolidated financial statements of Holdings and
unaudited Combined Financial Statements of ARDIS, respectively. In the
respective opinions of management of American Mobile, Holdings and ARDIS, such
unaudited combined and consolidated financial statements have been prepared on
the same basis as the audited financial statements referred to above and
include all adjustments (consisting of normal recurring accruals) necessary
for a fair presentation of the financial information for the interim periods.
Results of operations for the three months ended March 31, 1998, are not
necessarily indicative of the results to be expected for fiscal 1998. The
following data should be read in conjunction with the ARDIS' Combined
Financial Statements and related notes and Holdings' Consolidated Financial
Statements and related notes including American Mobile's combined condensed
financial statements, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and other financial information included
elsewhere or incorporated by reference herein, as applicable.
30
<PAGE>
AMERICAN MOBILE
SELECTED COMBINED FINANCIAL AND OTHER DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------- --------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT SUBSCRIBERS AND REVENUE PER UNIT)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues:
Services............... $ 852 $ 3,662 $ 6,873 $ 9,201 $ 20,684 $ 4,173 $ 6,418
Equipment.............. -- 1,578 1,924 18,529 23,530 4,532 3,604
-------- -------- -------- --------- --------- --------- ---------
Total revenue.......... 852 5,240 8,797 27,730 44,214 8,705 10,022
Cost of service and
operations............. 7,188 10,241 23,863 30,471 31,959 8,873 7,728
Cost of equipment sold.. -- 2,329 4,676 31,903 40,335 5,442 3,881
Sales and advertising... 2,942 5,882 22,683 24,541 12,030 3,221 2,993
General and
administrative......... 8,375 12,231 17,285 16,212 14,890 4,777 3,659
Depreciation and
amortization........... 7,459 4,541 11,568 45,496 44,535 10,463 10,689
-------- -------- -------- --------- --------- --------- ---------
Operating loss.......... (25,112) (29,984) (71,278) (120,893) (99,535) (24,071) (18,928)
Interest and other
income................. 202 847 1,242 552 1,122 945 141
Interest expense (1).... -- -- (3,305) (44,636) (51,153) (11,622) (13,826)
-------- -------- -------- --------- --------- --------- ---------
Net loss................ $(24,910) $(29,137) $(73,341) $(164,977) $(149,566) $(34,748) $(32,613)
======== ======== ======== ========= ========= ========= =========
OTHER FINANCIAL AND
OPERATING DATA:
Number of subscribers
(end of period) (2).... -- -- -- 20,300 32,400 23,000 34,800
Average monthly revenue
per unit (2)........... -- -- -- $ 81 $ 65 $ 64 $ 64
EBITDA (3).............. (17,653) (25,443) (59,710) (75,397) (54,125) (12,733) (8,239)
Capital expenditures.... 64,044 50,762 83,776 14,054 8,598 1,126 3,574
Ratio of earnings to
fixed charges (4)...... -- -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31,
----------------------------------------------- --------------------
1993 1994 1995 1996 1997 1997 1998(7)
-------- -------- -------- --------- -------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents............ $ 4,012 $ 10,861 $ 8,864 $ 2,182 $ 2,106 $ 1,572 $ 21,279
Property and equipment,
net (5)................ 220,520 275,146 383,301 287,127 250,335 278,286 280,894
Total assets............ 230,226 292,971 419,546 386,537 351,796 377,518 574,473
Total debt (6).......... 157,630 244,849 425,863 545,432 660,399 579,651 365,705
Total stockholders'
equity (deficit)....... 61,701 32,564 (40,779) (205,754) (355,320) (237,787) (169,991)
</TABLE>
- ---------------------
(1) Includes interest expense accrued on inter-company loans between Holdings
and American Mobile in the amount of $2.4 million in 1995, $29.5 million
in 1996, $29.5 million in 1997, $7.3 million for the three months ended
March 31, 1997 and $7.2 million for the three months ended March 31, 1998,
net of inter-company interest capitalized of $9.0 million in 1993, $9.4
million in 1994 and $21.1 million in 1995.
(2) Prior to 1996 American Mobile was a development stage company and leased
satellite capacity primarily on a pass-thru basis. As such, subscriber
information is not available for periods prior to 1996. Average monthly
revenue per unit for year ending December 31, 1996 was calculated on an
average monthly basis after adjusting both subscribers and revenues to
normalize for the acquisition, in late 1996, of MCSS.
(3) EBITDA consists of operating income (loss) plus depreciation and
amortization. EBITDA is a financial measure commonly used in The Company's
industry and should not be construed as an alternative to operating income
(as determined in accordance with GAAP) or as a measure of liquidity.
EBITDA does not represent funds available for dividends, reinvestment or
other discretionary activities. EBITDA for the three-months ending March
31, 1997 and the year ending December 31, 1997 have been adjusted to
include $875,000 of other income from the licensing of certain technology.
(4) For purposes of calculating the ratio of earnings to fixed charges,
earnings are defined as loss before income taxes and extraordinary items
plus fixed charges. Fixed charges consist of interest expense,
amortization of debt issuance costs, accretion of discount on preferred
stock and a reasonable approximation of the interest factor included in
rental payments on operating leases. Earnings were inadequate to cover
fixed charges for the years ended December 31, 1993, 1994, 1995, 1996 and
1997 by $47.3 million, $42.1 million, $99.1 million, $165.0 million, and
$150.0 million respectively, and for the three months ended March 31, 1997
and 1998 by $34.7 million and $32.6 million, respectively.
(5) Includes capitalized interest of $22.4 million, $12.9 million, and $25.7
million in 1993, 1994 and 1995, respectively.
(6) Includes $103.2 million in 1993, $163.3 million in 1994, $349.5 million in
1995, $400.8 million in 1996, $441.8 million in 1997 and $404.0 million as
of March 31, 1997, of inter-company loans between Holdings and American
Mobile.
(7) Includes the acquisition of ARDIS and contribution of intercompany loans
by Holdings.
31
<PAGE>
HOLDINGS
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------- ---------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- --------- --------- --------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues:
Services............... $ 852 $ 3,662 $ 6,873 $ 9,201 $ 20,684 $ 4,153 $ 6,418
Equipment.............. -- 1,578 1,924 18,529 23,530 4,532 3,604
-------- -------- -------- --------- --------- --------- ---------
Total revenue.......... 852 5,240 8,797 27,730 44,214 8,685 10,022
Cost of service and
operations............. 7,232 10,327 23,948 30,471 31,959 8,873 7,728
Cost of equipment sold.. -- 2,329 4,676 31,903 40,335 5,442 3,881
Sales and advertising... 3,010 5,973 22,775 24,541 12,066 3,221 3,022
General and
administrative......... 7,528 11,674 16,681 17,464 14,819 4,868 3,631
Depreciation and
amortization........... 7,459 4,541 11,218 43,390 42,430 9,937 10,163
-------- -------- -------- --------- --------- --------- ---------
Operating loss.......... (24,377) (29,604) (70,501) (120,039) (97,395) (23,656) (18,403)
Interest and other
income (expense)....... 569 8,501 4,500 552 (179) 945 (201)
Interest expense........ -- -- (916) (15,151) (21,633) (4,370) (6,638)
-------- -------- -------- --------- --------- --------- ---------
Loss before
extraordinary item..... (23,808) (21,103) (66,917) (134,638) (119,207) (27,081) (25,242)
Extraordinary item (1).. (1,372) -- -- -- -- -- --
-------- -------- -------- --------- --------- --------- ---------
Net loss................ $(25,180) $(21,103) $(66,917) $(134,638) $(119,207) $ (27,081) $ (25,242)
======== ======== ======== ========= ========= ========= =========
Loss per share of Common
Stock:
Loss before
extraordinary item..... $ (2.36) $ (0.86) $ (2.69) $ (5.38) $ (4.74) $ (1.08) $ (1.00)
Extraordinary item...... (0.13) -- -- -- -- -- --
-------- -------- -------- --------- --------- --------- ---------
Net loss per common
share.................. $ (2.49) $ (0.86) $ (2.69) $ (5.38) $ (4.74) $ (1.08) $ (1.00)
======== ======== ======== ========= ========= ========= =========
Weighted average shares
outstanding (000's).... 10,103 24,672 24,900 25,041 25,131 25,109 25,241
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31,
-------------------------------------------------- ---------------------
1993 1994 1995 1996 1997 1997 1998(3)
-------- -------- -------- --------- --------- --------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents............ $243,060 $166,004 $ 8,865 $ 2,182 $ 2,106 $ 1,572 $ 21,279
Property and equipment,
net (2)................ 211,461 274,656 362,105 267,863 233,174 259,546 264,261
Total assets............ 460,382 448,674 398,351 350,173 311,447 345,628 574,145
Total debt.............. 82,585 81,572 76,362 144,601 218,563 175,649 465,706
Total stockholders'
equity................. 367,370 351,544 287,527 158,700 46,131 132,817 80,994
</TABLE>
- ---------------------
(1) Reflects extraordinary losses on debt conversion associated with the
initial public offering. Net loss per share on a pro forma basis, after
giving effect to the debt conversion, would have been ($2.15).
(2) In 1993, 1994 and 1995, capitalized interest was $13.3 million, $3.5
million and $4.7 million, respectively.
(3) Includes the acquisition of ARDIS on March 31, 1998.
32
<PAGE>
ARDIS
SELECTED COMBINED FINANCIAL AND OTHER DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------ --------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT SUBSCRIBERS AND REVENUE PER UNIT)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues:
Services............... $ 43,831 $ 48,561 $ 40,006 $ 43,413 $ 41,923 $ 10,598 $ 9,541
Equipment and
consulting............ 2,773 2,346 1,266 1,884 2,326 327 530
-------- -------- -------- -------- -------- --------- ---------
Total revenue.......... 46,604 50,907 41,272 45,297 44,249 10,925 10,071
Cost of service and
operations............. 39,078 38,923 39,884 32,805 31,940 7,179 7,795
Cost of equipment sold.. 1,756 1,621 1,878 1,350 2,233 466 581
Selling and
advertising............ 10,193 14,311 15,164 13,677 5,888 1,528 1,562
General and
administration......... 7,979 8,785 10,623 9,364 6,970 1,105 1,487
Depreciation and
Amortization........... 7,888 10,098 14,355 17,269 14,586 3,580 3,291
Non-recurring expense
(1).................... 20,414 -- -- -- -- -- --
-------- -------- -------- -------- -------- --------- ---------
Operating loss.......... (40,704) (22,831) (40,632) (29,168) (17,368) (2,933) (4,645)
Interest income......... 258 327 481 198 150 34 5
Interest expense........ -- -- (688) (1,556) (1,331) (362) (282)
-------- -------- -------- -------- -------- --------- ---------
Net loss before taxes... (40,446) (22,504) (40,839) (30,526) (18,549) (3,261) (4,922)
Income tax benefit...... -- -- 15,586 11,528 6,807 1,141 1,702
-------- -------- -------- -------- -------- --------- ---------
Net loss................ $(40,446) $(22,504) $(25,253) $(18,998) $(11,742) $ (2,120) $ (3,220)
======== ======== ======== ======== ======== ========= =========
OTHER FINANCIAL AND
OPERATING DATA:
Number of subscribers
(end of period)........ 24,800 33,100 44,200 52,500 55,400 54,600 57,600
Average monthly revenue
per unit............... $ 150 $ 140 $ 86 $ 75 $ 65 $ 66 $ 56
EBITDA (2).............. (32,816) (12,733) (26,277) (11,899) (2,782) (647) (1,354)
Capital expenditures.... 17,966 17,303 42,366 4,806 1,736 655 1,317
Ratio of earnings to
fixed charges (3)...... -- -- -- -- -- -- --
<CAPTION>
AS OF DECEMBER 31
------------------------------------------------
1993 1994 1995 1996 1997
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents............ $ 8,896 $ 16,035 $ 6,985 $ 5,289 $ 2,082
Property and equipment,
net.................... 31,738 38,476 65,228 53,302 41,801
Total assets............ 61,113 83,368 103,231 91,252 69,830
Total debt.............. -- -- 18,019 16,395 12,831
Total stockholders'
equity................. 48,143 55,940 72,267 65,141 48,092
</TABLE>
- ---------------------
(1) Non-recurring item represents the write-off of previously capitalized
software development costs.
(2) EBITDA consists of operating income (loss) plus depreciation and
amortization. EBITDA is a financial measure commonly used in the Company's
industry and should not be construed as an alternative to operating income
(as determined in accordance with GAAP) or as a measure of liquidity.
EBITDA does not represent funds available for dividends, reinvestment or
other discretionary activities. EBITDA for 1993 includes extraordinary
items. EBITDA for 1993 includes a non-recurring charge in the amount of
$20.4 million relating to the write-off of previously capitalized software
development costs.
(3) For purposes of calculating the ratio of earnings to fixed charges,
earnings are defined as loss before income taxes and extraordinary item
plus fixed charges. Fixed charges consist of interest expense,
amortization of debt issuance costs, accretion of discount on preferred
stock and a reasonable approximation of the interest factor included in
rental payments on operating leases. Earnings were inadequate to cover
fixed charges for the years ended December 31, 1993, 1994, 1995, 1996 and
1997 by $40.4 million, $22.5 million, $40.8 million, $30.5 million and
$18.5 million, respectively, and for the three months ended March 31, 1997
and 1998 by $3.3 million and $4.9 million, respectively.
33
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The accompanying pro forma financial information of the Company gives effect
to (i) the Acquisition, (ii) the Offering and (iii) the New Bank Financing as
if such transactions had been consummated on January 1 of each of the periods
presented. The pro forma condensed financial information is presented for
illustrative purposes only and is not necessarily indicative of what the
Company's actual financial position and results of operations would have been
had the above-referenced transactions been consummated as of the above-
referenced dates or of the financial position or results of operations that
may be reported by the Company in the future.
The following data should be read in conjunction with Holdings' Consolidated
Financial Statements and related notes and ARDIS' Combined Financial
Statements and related notes.
34
<PAGE>
THE COMPANY
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
----------------------------------------------------
PRO FORMA
ADJUSTMENTS
AMERICAN -------------------- PRO FORMA:
MOBILE ARDIS ACQUISITION OFFERING THE COMPANY
-------- ------- ----------- -------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues:
Services................ $ 6,418 $ 9,541 $ (139)(1) $ 15,820
Equipment and
consulting............. 3,604 530 4,134
-------- ------- --------
Total revenue........... 10,022 10,071 19,954
Cost of service and
operations.............. 7,728 7,795 (139)(1) 15,384
Cost of equipment sold... 3,881 581 4,462
Sales and advertising.... 2,993 1,562 4,555
General and
administrative.......... 3,659 1,487 5,146
Depreciation and 10,689 3,291 845 (3) 14,501
amortization............
(324)(2)
-------- ------- --------
Operating loss........... (18,928) (4,645) (24,094)
Interest and other
income.................. 141 5 1,413 (5) 1,559
Interest expense......... (13,826) (282) 590 (4) (13,518)
-------- ------- --------
Loss before income tax
benefit................. (32,613) (4,922) (36,053)
Income tax benefit....... -- 1,702 (1,702)(6) --
-------- ------- --------
Net loss................. $(32,613) $(3,220) $(36,053)
======== ======= ========
</TABLE>
See Notes to Pro Forma Financial Information on following pages.
35
<PAGE>
THE COMPANY
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997
-----------------------------------------------------
PRO FORMA
ADJUSTMENTS
---------------------
AMERICAN PRO FORMA:
MOBILE ARDIS ACQUISITION OFFERING THE COMPANY
-------- ------- ----------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues:
Services............... $ 4,173 $10,598 $ (97)(1) $ 14,674
Equipment and
consulting............ 4,532 327 4,859
-------- ------- --------
Total revenue......... 8,705 10,925 19,533
Cost of service and
operations............. 8,873 7,179 (97)(1) 15,955
Cost of equipment sold.. 5,442 466 5,908
Sales and advertising... 3,221 1,528 4,749
General and
administrative......... 4,777 1,105 5,882
Depreciation and
amortization........... 10,463 3,580 845 (3) 14,564
-------- ------- --------
(324)(2)
Operating loss.......... (24,071) (2,933) (27,525)
Interest and other
income................. 945 34 1,413 (5) 2,392
Interest expense........ (11,622) (362) (1,576)(4) (13,560)
-------- ------- --------
Loss before income tax
benefit................ (34,748) (3,261) (38,693)
Income tax benefit...... -- 1,141 (1,141)(6) --
-------- ------- --------
Net loss................ $(34,748) $(2,120) $(38,693)
======== ======= ========
</TABLE>
See Notes to Pro Forma Financial Information on following pages.
36
<PAGE>
THE COMPANY
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
--------------------------------------------------------
PRO FORMA:
ADJUSTMENTS
----------------------
AMERICAN PRO FORMA:
MOBILE ARDIS ACQUISITION OFFERING THE COMPANY
--------- -------- ----------- -------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues:
Services............... $ 20,684 $ 41,923 $ (498)(1) $ 62,109
Equipment and
consulting............ 23,530 2,326 25,856
--------- -------- ---------
Total revenue......... 44,214 44,249 87,965
Cost of service and
operations............. 31,959 31,940 (498)(1) 63,401
Cost of equipment sold.. 40,335 2,233 42,568
Sales and advertising... 12,030 5,888 17,918
General and
administrative......... 14,890 6,970 21,860
Depreciation and
amortization........... 44,535 14,586 3,380 (3) 61,204
--------- -------- ---------
(1,297)(2)
Operating loss.......... (99,535) (17,368) (118,986)
Interest and other
income................. 1,122 150 5,208 (5) 6,480
Interest expense........ (51,153) (1,331) (141)(4) (52,625)
--------- -------- ---------
Loss before income tax
benefit................ (149,566) (18,549) (165,131)
Income tax benefit...... -- 6,807 (6,807)(6) --
--------- -------- ---------
Net loss................ $(149,566) $(11,742) $(165,131)
========= ======== =========
</TABLE>
See Notes to Pro Forma Financial information on following pages.
37
<PAGE>
NOTES TO PRO FORMA FINANCIAL INFORMATION
The pro forma financial information is based on the following assumptions
and adjustments:
(1) Reflects the elimination of revenues and related operating expenses on
transactions between American Mobile and ARDIS.
(2) Reflects the elimination of goodwill amortization recorded by ARDIS.
(3) Reflects the amortization, over a 20-year life, of the excess of purchase
price of ARDIS over fair market value of assets acquired.
(4) Reflects adjustments to interest expense as follows:
<TABLE>
<CAPTION>
YEAR THREE MONTHS
ENDED ENDED MARCH 31,
DECEMBER ----------------
31, 1997 1997 1998
-------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
(a) Adjustment of interest expense and debt
costs on New Bank Financing and vendor
financing.............................. $(15,227) $(2,819) $(4,530)
(b) Interest expense on the Notes and
amortization of debt discount ......... 41,887 10,471 10,471
(c) Amortization of Note issuance costs.... 1,225 306 306
(d) Amortization of the Guarantee Warrants
....................................... 1,776 870 351
(e) Elimination of inter-company interest.. (29,520) (7,252) (7,188)
-------- ------- -------
$ 141 $ 1,576 $ (590)
======== ======= =======
</TABLE>
The assumptions in connection with the above pro forma interest expense
adjustments are as follows:
(a) Reflects (i) an increase of 25 basis points in the interest rate of
the New Bank Financing relative to the Bank Financing, (ii) the
elimination of interest expense applicable to the Bank Financing and
vendor financing which is to be partially repaid with the proceeds
from the sale of the Units and (iii) the elimination of interest
expense and deferred financing costs (including costs associated with
the Guarantee Warrants) which were incurred in connection with the
Bank Financing on Holdings' $100.0 million Term Loan Facility.
(b) Reflects interest expense on the Notes at 12 1/4% and amortization of
the $8.5 million debt discount.
(c) Reflects the amortization, over ten years, of debt issuance costs of
approximately $12.2 million associated with the Notes.
(d) Reflects the amortization, over a five-year period, of the Guarantee
Warrants related to the New Bank Financing.
(e) Reflects the elimination of inter-company interest expense between
American Mobile and Holdings in connection with the contribution of
inter-company notes by Holdings to the Company.
(5) Reflects interest income earned on the Pledged Securities at an average
interest rate of 5.0%.
(6) Reflects the elimination of a tax sharing arrangement between ARDIS and
Motorola.
38
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
General. The Company believes that its targeted customer base selects its
communications service provider based on a variety of considerations including
network coverage and quality as well as the total cost of ownership. The
Company also believes that the coverage and quality of its network are
superior to other competing networks. As a result, the Company believes it is
able to price its offerings at a premium to other competitors. However, to
remain competitive and to accelerate penetration of its targeted markets, as
well as to gain access to new markets, the Company seeks to lower the
customers' total cost of ownership of its products and services.
Total cost of ownership is comprised of three main components: (i) equipment
costs, (ii) software application costs and (iii) usage fees. Currently,
American Mobile and ARDIS benefit from positive trends in equipment pricing.
Historically, manufacturers have been able to provide similar products at
significantly lower prices and enhanced products at relatively lower prices.
The Company is working closely with a number of equipment vendors to develop
more capable, less costly next generation devices. As a result, the Company
believes that the cost of its equipment will decline in the future. American
Mobile and ARDIS also have benefited, although to a lesser degree, from trends
in the software industry that have resulted in lower prices for software
applications. In the future, the Company intends to increase its offering of
pre-packaged software as standardized applications become more advanced. The
Company believes that by offering pre-packaged applications, it will be able
to lower its customers' total cost of ownership. The Company also is able to
lower the total cost of ownership by offering a wide range of product
offerings and service packages. The Company provides its data customers with a
choice of multi-mode or single mode (i.e., satellite and/or terrestrial)
products as well as a variety of service packages that vary the mix of fixed
access and variable usage fees. Depending on where, how and when a customer
intends to use the Company's network, it can select among various products and
service packages to minimize its monthly usage fee.
Revenues. American Mobile and ARDIS generate their service revenues from
fixed monthly access charges and variable usage fees. Both companies also have
entered into certain multi-year take-or-pay contracts with resellers and
value-added service providers ("VASPs"). The Company anticipates that such
resellers and VASPs will represent an increasing percentage of its revenue and
its customer base in the future. In addition, American Mobile sells bulk
channel capacity on its satellite under take-or-pay contracts that generally
last for five years. Each month a percentage of the Company's customer base
may terminate its service for a variety of reasons, including failure to pay,
dissatisfaction with the service or the use of a competing service. However,
the Company believes that given the generally high quality of its service, the
long-term nature of many of its contracts, the significant up-front investment
required to install a new system and the critical nature of the service
provided, the Company experiences relatively low levels of turnover.
American Mobile generates additional revenues from the sale of equipment. As
a result of certain manufacturer requirements to purchase bulk quantities of
inventory and American Mobile's shift from a consumer to a business customer
focus in 1996, American Mobile has not sold subscriber equipment at a positive
margin and does not expect to do so in the future. ARDIS generates additional
revenues from consulting fees earned during service implementation and from
equipment sales, but the majority of ARDIS' customers buy their equipment
directly from manufacturers.
Costs and Expenses. American Mobile and ARDIS operate wireless networks
which have been deployed on a nationwide scale. As a result, both companies
have incurred, and the Company will continue to incur, large fixed costs
related to the ongoing maintenance and operation of the network. Major
components of the Company's fixed cost structure include (i) lease expense
related to the network's approximately 1,700 base stations, dedicated and
frame relay access lines and network backbone, (ii) operation of American
Mobile's and ARDIS' network operations and control centers, (iii) satellite
telemetry, tracking and control expenses and (iv) satellite insurance.
American Mobile and ARDIS also have incurred significant sales and marketing
expenses
39
<PAGE>
as they have grown their customer bases. Both companies recently reoriented
their sales and marketing efforts toward serving business customers.
Previously, both American Mobile and ARDIS spent significant time and
resources to penetrate consumer markets. Toward this end, the companies
developed large, consumer-oriented sales and marketing organizations that
resulted in increased operating expenses without corresponding subscriber
growth. The Company believes that it now has developed an appropriate sales
and marketing infrastructure to meet the anticipated demand of its business
customers.
The Company believes that, as a result of the Acquisition, it will be able
to capitalize upon meaningful operational synergies which could expedite the
Company's ability to generate positive EBITDA and free cash flow (operating
cash flow less capital expenditures). In addition, the Company believes it
will be able to enhance revenue growth through cross-selling opportunities
between American Mobile's and ARDIS' salesforces. The Company also expects to
rationalize its cost structure through (i) network optimization and
integration, (ii) office and systems consolidation and (iii) limited personnel
reductions.
To date, American Mobile and ARDIS have experienced significant operating
and net losses and negative EBITDA as they have developed their networks. The
Company expects that it will continue to experience such operating losses and
negative EBITDA until such time as it develops a revenue-generating customer
base sufficient to fund its operating expenses.
THE COMPANY
The results discussed below represent information relating to Holdings, on a
consolidated basis. Major differences between the financial statements of
Holdings and the Company are (i) the Term Loan Facility is an obligation of
Holdings and, as such, the related debt and interest costs are not included in
the Company's financial statements and (ii) certain inter-company management
fees and expenses between Holdings and Company that are not eliminated at the
Company level.
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31,
1997
Operating Revenues. Service revenues, which include both the Company's voice
and data services, approximated $6.4 million for the quarter ended March 31,
1998 as compared to $4.2 million for the same period in 1997 and represents a
52% increase year over year. Service revenue from voice services increased 78%
from approximately $1.8 million in the first quarter of 1997 to approximately
$3.2 million in the comparable period of 1998. The $1.4 million increase was
primarily a result of an 85% increase in voice customers during the first
quarter of 1998 as compared to the comparable period in 1997. Service revenue
from the Company's data services approximated $2.3 million in the first
quarter of 1998, as compared to $1.6 million for the comparable quarter of
1997, an increase of $700,000 or 44%. The increase was primarily a result of a
25% increase in data units. Service revenue from capacity resellers, who
handle both voice and data services, approximated $805,000 in the first
quarter of 1998, as compared to $518,000 for the first quarter of 1997, an
increase of $287,000 or 55%. As of March 31, 1998 and 1997, receivables
relating to service revenues were $4.0 million and $3.0 million, respectively.
Revenue from the sale of mobile data terminals and mobile telephones
decreased 20% from $4.5 million in the first quarter of 1997 to $3.6 million
in the first quarter of 1998. The decrease was primarily attributable to
reduced sales of voice products, as well as certain price reductions made in
the first quarter of 1998. As of March 31, 1998 and 1997, receivables relating
to equipment revenue were $2.5 million and $7.0 million respectively.
Costs and Expenses. Cost of service and operations for the first quarter of
1998, which includes costs to support subscribers and to operate the Satellite
Network, were $7.7 million for 1998 and $8.9 million for the same period of
1997. Cost of service and operations for the first quarter of 1998 and 1997,
as a percentage of revenues, were 77% and 102%, respectively. The decrease in
cost of service and operations was primarily attributable to a reduction in
information technology costs affected by dramatically reducing the dependence
on outside consultants, offset by increased interconnect charges associated
with increased service usage.
40
<PAGE>
The cost of equipment sold decreased 28% from $5.4 million in the first
quarter of 1997 to $3.9 million for the same period in 1998. The dollar
decrease in the cost of equipment sold is primarily attributable to (i) a
corresponding decrease in voice equipment sales and (ii) the impact of the
inventory valuation allowance recorded in the fourth quarter of 1997.
Sales and advertising expenses were $3.0 million in the first quarter of
1998, compared to $3.2 million for the same period in 1997. Sales and
advertising expenses as a percentage of revenue were 30% in the first quarter
of 1998 and 37% in the first quarter of 1997. The decrease of sales and
advertising expenses was primarily attributable to a reduction in subscriber
acquisition costs as the first quarter marketing and promotional initiatives
were put on hold pending the Acquisition. It is anticipated that these costs
will increase as the Company rolls out new marketing programs associated with
the new corporate strategy.
General and administrative expenses for the first quarter of 1998 were $3.6
million, compared to $4.9 million in the first quarter of 1997. As a
percentage of revenue, general and administrative expenses represented 36% in
the first quarter of 1998 and 56% in the first quarter of 1997. The decrease
in general and administrative expenses for 1998 compared to 1997 was primarily
attributable to (i) a $775,000 reduction in personnel expenses as a result of
deferred hiring decisions and (ii) a $371,000 reduction in insurance premiums,
primarily related to the negotiation of better rates on certain key insurance
policies.
Depreciation and amortization expense was $10.2 million and $9.9 million for
the first quarter of 1998 and 1997, respectively, representing approximately
102% and 114% of revenue for the first quarter of 1998 and 1997, respectively.
The increase in depreciation and amortization expense was attributable to
depreciation on newly-acquired assets.
Interest and Other Income. Interest and other income was $141,000 for the
first quarter of 1998 compared to $945,000 for the same period in 1997. The
decrease was a result of other income in the amount of $875,000 representing
proceeds from the licensing of certain technology associated with the
Satellite Network received in the first quarter of 1997, offset by a $100,000
increase in interest income earned on certain escrowed monies. The Company
incurred $6.6 million of interest expense in the first quarter of 1998
compared to $4.4 million for the same period in 1997, reflecting (i) the
amortization of debt discount and debt offering costs in the amount of $2.5
million in 1998, compared to $1.8 million in 1997, and (ii) higher outstanding
loan balances as compared to 1997.
Capital Expenditures. Net capital expenditures, including additions financed
through vendor financing arrangements, for the first quarter of 1998 for
property and equipment were $1.1 million compared to $1.8 million for the same
period in 1997. The decrease was largely attributable to the reduction in the
acquisition of assets necessary to complete the satellite network.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
Operating Revenues. Service revenues, which include both the Company's voice
and data services, approximated $20.7 million for 1997 as compared to $9.2
million for 1996 and represents a 125% increase year over year. Service
revenue from voice services increased 100% from approximately $5.0 million in
1996 to approximately $10.0 million in 1997. The $5.0 million increase was
primarily a result of a 101% increase in voice customers during 1997. Service
revenue from the Company's data services approximated $7.6 million in 1997, as
compared to $2.3 million for 1996, an increase of $5.4 million or 245%. The
increase was primarily a result of additional revenue from dual mode
subscribers added as a result of the acquisition, on November 1996, of
Rockwell's dual mode mobile messaging and global positioning and monitoring
service, as compared to the revenue received in 1996 for satellite capacity
leased by Rockwell. Service revenue from capacity resellers, who handle both
voice and data services, approximated $2.8 million in 1997, as compared to
$1.8 million in 1996, an increase of $1.0 million or 56%. As of December 31,
1997 and 1996, receivables relating to service revenues were $3.6 million and
$1.8 million, respectively.
41
<PAGE>
Revenue from the sale of mobile data terminals and mobile telephones
increased 27% from $18.5 million in 1996 to $23.5 million in 1997. The
increase was primarily attributable to increased equipment sales of the dual-
mode mobile messaging product, discussed above. As of December 31, 1997 and
1996, receivables relating to equipment revenue were $5.9 million and $5.8
million respectively.
Costs and Expenses. Cost of service and operations for 1997, which includes
costs to support subscribers and to operate the Satellite Network, were $32.0
million for 1997 and $30.5 million for 1996. Cost of service and operations
for 1997 and 1996, as a percentage of revenues, were 72% and 110%,
respectively. The increase in cost of service and operations was primarily
attributable to (i) increased interconnect charges associated with increased
service usage by customers, and (ii) the additional cost associated with
supporting the dual mode mobile messaging product discussed above, offset by a
reduction in information technology costs affected by dramatically reducing
the dependence on outside consultants.
The cost of equipment sold increased 26% from $31.9 million in 1996 to $40.3
million in 1997. The dollar increase in the cost of equipment sold is
primarily attributable to (i) increased sales as a result of the acquisition
of the dual mode messaging product, (ii) an increase of $600,000 in inventory
carrying costs as certain subscriber equipment contracts were fulfilled, and
(iii) a $12.0 million write down of inventory to net realizable value in 1997
as compared to $11.1 million write down and reconfiguration charges in 1996.
Sales and advertising expenses were $12.1 million in 1997, compared to $24.5
million in 1996. Sales and advertising expenses as a percentage of revenue
were 27% in 1997 and 88% in 1996. The decrease of sales and advertising
expenses was primarily attributable to (i) a more focused approach to
advertising as the company has moved from consumer markets to targeted
business-to-business sales, and the resulting reduction in print advertising,
(ii) increased costs in the first quarter of 1996 for the development of
collateral material needed to support the sales effort, and (iii) costs
incurred in the first quarter of 1996 associated with the formal launch of
service.
General and administrative expenses for 1997 were $14.8 million, compared to
$17.5 million in 1996. As a percentage of revenue, general and administrative
expenses represented 34% in 1997 and 63% in 1996. The decrease in general and
administrative expenses for 1997 compared to 1996 was primarily attributable
to reductions made in staffing as a result of a management restructuring in
the third quarter of 1996 and the associated severance costs.
Depreciation and amortization expense was $42.4 million and $43.4 million in
1997 and 1996, respectively, representing approximately 96% and 156% of
revenue for 1997 and 1996, respectively. The overall dollar and percentage
decrease in depreciation and amortization expense was attributable to the
reduction of the carrying value of the satellite as a result of the
resolution, in August 1996, of claims under the Company's satellite insurance
contracts and policies and the receipt of approximately $66.0 million, offset
by a $1.0 million one-time charge, in the second quarter of 1997, associated
with increased amortization in accordance with SFAS No. 86 of certain cost
associated with software development for the mobile data product.
Interest and Other Income. Interest income was $247,000 in 1997 compared to
$552,000 in 1996. The decrease was a result of lower average cash balances.
The Company incurred $21.6 million of interest expense in 1997 compared to
$15.2 million of interest expense in 1996 reflecting (i) the amortization of
debt discount and debt offering costs in the amount of $9.4 million in 1997,
compared to $5.7 million in 1996, and (ii) higher outstanding loan balances as
compared to 1996. During 1997, the Company received other income in the amount
of $875,000 representing proceeds from the licensing of certain technology
associated with the Satellite Network.
Interest expense in 1997 was significant as a result of borrowings under the
Bank Financing, as well as the amortization of borrowing costs incurred in
conjunction with securing the facility. It is anticipated that interest costs
will continue to be significant as a result of the Bank Financing, Bridge
Financing, and Acquisition, (see "Liquidity and Capital Resources").
42
<PAGE>
Capital Expenditures. Net capital expenditures, including additions financed
through vendor financing arrangements, for 1997 for property and equipment
were $8.8 million compared to capital reductions of $51.0 million in 1996. The
$59.4 million increase was largely attributable to (i) the net proceeds in
1996 of $66.0 million from the resolution of the claims under the Company's
satellite insurance contracts and policies (see "Liquidity and Capital
Resources") and (ii) the decrease in asset acquisitions associated with the
final build-out of the communications ground segment (the "CGS").
Years Ended December 31, 1996 and 1995
Service Revenues. Service revenues, which include both the Company's voice
and data services, approximated $9.2 million for 1996 as compared to $6.9
million for 1995 which represents a 33% increase year over year. Service
revenue from voice services approximated $5.0 million in 1996, including
approximately $1.3 million attributable to satellite capacity leased to TMI,
under a commitment which was completed in May 1996. Service revenue from the
Company's data and position location services ("Mobile Data Communication
Service") approximated $2.2 million in 1996, as compared to $1.7 for 1995, an
increase of $500,000 or 29%. Service revenue from capacity resellers who
handle both voice and data services, approximated $1.8 million in 1996, as
compared to $5.2 million in 1995, a decrease of $3.4 million or 65%. Prior to
1996, the Company provided its Mobile Data Communication Service using
satellite capacity leased from the Communications Satellite Corporation
("COMSAT"), the cost of which was passed through to one customer (Rockwell).
The decrease in revenue from capacity resellers reflects the reduced revenue
from Rockwell resulting from lower billings for the use of the lower cost
MSAT-2 versus billings attributable to the leased COMSAT satellite applied on
a pass-through basis. As previously discussed, the Company acquired the dual
mode mobile messaging and global positioning and monitoring service of
Rockwell in November 1996. At December 31, 1996 and 1995, receivables relating
to service revenues were $1.8 million and $405,000, respectively.
Revenue from the sale of mobile data terminals and mobile telephones
increased from $1.9 million in 1995 to $18.5 million in 1996, primarily
attributable to (i) the Company's introduction of certain voice products in
the fourth quarter of 1995 and the resulting sale of mobile telephones, and
(ii) the increased availability of mobile data terminals in 1996 compared to
1995 following a contract signed with a mobile data terminal manufacturer in
February 1995.
Costs and Expense. The Company's costs and expenses have primarily increased
in connection with the start of full commercial service in December 1995. Cost
of service and operations for 1996, which includes costs to support
subscribers and to operate the Satellite Network, were $30.5 million for 1996,
an increase of $6.5 million from 1995. Cost of service and operations for 1996
and 1995, as a percentage of revenue were 110% and 272%, respectively. The
dollar increase in cost of service and operations was primarily attributable
to (i) additional personnel and related costs to support both existing and
anticipated customer demand, (ii) increased costs associated with the on-going
maintenance of the Company's billing systems and the CGS, and (iii) $6.5
million of insurance expense for in-orbit insurance coverage for MSAT-2,
offset by the elimination of COMSAT lease expense reflecting the transition of
the Company's customers from the leased satellite to MSAT-2.
The cost of equipment sold increased to $31.9 million in 1996 from $4.7
million in 1995. The increase in cost of equipment sold is primarily
attributable to (i) the Company's introduction of certain voice products in
the fourth quarter of 1995 and the resulting sale of mobile telephones, (ii)
the availability of mobile data terminals in 1996 compared to 1995, (iii) a
$4.2 million charge in 1996 for the reconfiguration of certain components to
better meet customer requirements, and (iv) a $6.9 million write down of
inventory to net realizable value in 1996.
Sales and advertising expenses were $24.5 million in 1996, compared to $22.8
million in 1995. Sales and advertising expenses as a percentage of revenue
were 88% in 1996 and 259% in 1995. The increase of sales and advertising
expenses was primarily attributable to (i) additional head count and personnel
related costs associated with the increase in sales staff, and (ii) increased
costs directly associated with the increase in subscriber acquisition
programs, offset by a $1.4 million charge, in 1995, associated with the re-
acquisition of defective equipment located at a customer site and settlement
of related disputes.
43
<PAGE>
General and administrative expenses for 1996 were $17.5 million, an increase
of $0.8 million as compared to 1995. As a percentage of revenue, general and
administrative expenses represented 63% in 1996 and 190% in 1995. The dollar
increase in general and administrative expenses for 1996 compared to 1995 was
primarily attributable to (i) approximately $675,000 of severance costs
associated with a management restructuring and (ii) an increase in facilities
rents and utilities of $236,000. The decrease of general and administrative
expenses as a percentage of operating expenses was attributable to the overall
increase in operating expenses.
Depreciation and amortization expense was $43.4 million and $11.2 million in
1996 and 1995, respectively, representing approximately 156% and 128% of
revenue for 1996 and 1995, respectively. The increase in depreciation and
amortization expense was attributable to the commencement of depreciation of
both MSAT-2 and related assets and the CGS in the fourth quarter of 1995.
Interest and Other Income. Interest and other income was $552,000 in 1996
compared to $4.5 million in 1995. The decrease was a result of lower average
cash balances. The Company incurred $15.2 million of interest expense in 1996
compared to $916,000 of interest expense in 1995 reflecting (i) the
discontinuation of interest cost capitalization as a result of substantially
completing the Satellite Network in the fourth quarter of 1995, (ii) the
amortization of debt discount and debt offering costs (including Guarantee
Warrants (see "Liquidity and Capital Resources")) relating to the Bridge
Financing and Bank Financing (see "Liquidity and Capital Resources"), and
(iii) higher outstanding loan balances as compared to 1995.
Capital Expenditures. Net capital reductions, including additions financed
through vendor financing arrangements, for 1996 for property and equipment
were $51.0 million compared to capital expenditures of $86.7 million in 1995.
The decrease was largely attributable to (i) the net proceeds of $66.0 million
from the resolution of the claims under the Company's satellite insurance
contracts and policies (see "Liquidity and Capital Resources"), (ii) the
purchase, in the first quarter of 1995, of launch insurance at a cost to the
Company of $42.8 million in connection with the Company's launch contract with
Martin Marietta Commercial Launch Services, Inc., and (iii) the decrease in
construction activity as certain components of the CGS were completed.
ARDIS
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31,
1997
Operating Revenues. Services revenues were $9.5 million for the three months
ended March 31, 1998 as compared to $10.6 million for the three months ended
March 31, 1997. The decrease in revenue reflects reduced usage by several
large accounts and additional discounts extended to several large accounts
that signed multi-year agreements.
Revenue from the sale of equipment increased to $500,000 for the three
months ended March 31, 1998 compared to $300,000 for the three months ended
March 31, 1997. Devices made available from Research In Motion ("RIM") and
continued demand for the Motorola PCMCIA modem contributed to the increase.
Costs and Expenses. Total costs and expenses increased approximately 6% for
the three months ended March 31, 1998 compared to the same period in 1997.
Cost of services and operations for the three months ended March 31, 1998 were
$7.8 million, an increase from $7.2 million for the same period in 1997. This
increase was due primarily to increased costs to maintain the network along
with incremental costs for base stations which were installed during 1997.
Cost of services and operations for the three months ended March 31, 1998 and
1997 as a percentage of operating expenses were 53% and 52% respectively.
The cost of equipment sold for the three months ended March 31, 1998
increased to $600,000 from $500,000, which represented 4% and 3%,
respectively, of total operating expenses.
Sales and marketing expenses for the three months ended March 31, 1998 were
$1.6 million a slight increase from $1.5 million for the same period in 1997.
The increase was related to additional vertical distribution headcount as
compared to 1997. Sales and marketing costs as a percentage of operating
expenses were 11% in 1998 and 1997.
44
<PAGE>
General and administrative expenses for the three months ended March 31,
1998 were $1.5 million, an increase from $1.1 million for the same period in
1997. This increase was attributable primarily to increased reserve
requirements. As a percentage of operating expenses, general and
administrative expenses represented 10% in 1998 and 8% in 1997.
Depreciation and amortization expense for the three months ended March 31,
1998 was $3.3 million, a decline from $3.6 million for the same period in
1997. The decline was attributable to the network assets originally
contributed in 1990 becoming fully depreciated in March 1997 along with other
computer equipment becoming fully depreciated in the last twelve months.
Depreciation and amortization expense as a percentage of operating expenses
was 22% for 1998 and 26% for 1996.
Interest and Other Income. Net interest expense was $300,000 for the three
months ended March 1998 and 1997.
Capital Expenditures. Capital expenditures for the three months ended March
31, 1998 were $1.3 million compared to $700,000 for the same period in 1997.
The increase in capital expenditures reflects the purchase of base stations
and other network equipment to provide additional capacity as required for new
customers to be added in 1998 and 1999.
Year Ended December 31, 1997 Compared to the Year Ended December 31, 1996
Operating Revenues. Services revenues were $41.9 million for 1997 as
compared to $43.4 million for 1996. The decrease in revenue reflects reduced
usage during 1997 by several large accounts, including UPS, which was impacted
by the strike in 1997.
Revenue from the sale of equipment increased to $2.3 million in 1997
compared to $1.9 million in 1996. Devices made available from RIM during 1997
and continued demand for the Motorola PCMCIA modem contributed to the
increase.
Costs and Expenses. Total costs and expenses decreased approximately 17%
during 1997 compared to 1996. Cost of services and operations for 1997 were
$31.9 million, a decrease from $32.8 million for 1996. This decrease was due
primarily to continued cost savings derived from the consolidation of network
operations which were commenced during 1996.
The cost of equipment sold for 1997 increased to $2.2 million from $1.4
million for 1996 in relation to the increased revenue from equipment sales.
Sales and marketing expenses for 1997 were $5.9 million, a decrease from
$13.7 million for 1996. The decrease was primarily attributable to ARDIS'
shift from a consumer market focus in 1996 to its traditional vertical
business markets focus in 1997. Sales and marketing costs as a percentage of
revenue were 13% in 1997 and 30% in 1996.
General and administrative expenses in 1997 were $7.0 million, a decrease
from $9.4 million in 1996. This decrease was primarily attributable to (i)
reduced headcount and personnel related costs which had supported horizontal
marketing efforts, (ii) reduced software license expenses and (iii) reduced
reserve requirements. As a percentage of revenue, general and administrative
expenses represented 16% in 1997 and 21% in 1996.
Depreciation and amortization expense in 1997 was $14.6 million, a decrease
from $17.3 million in 1996. The decrease was attributable to the network
assets originally contributed in 1990 becoming fully depreciated in 1997.
Depreciation and amortization expense as a percentage of revenue was 33% for
1997 and 38% for 1996.
Interest and Other Income. Net interest expense was $1.2 million for 1997, a
decrease from $1.4 million in 1996. This decrease was a result of lower
capital lease balances.
45
<PAGE>
Capital Expenditures. Capital expenditures for 1997 were $1.4 million
compared to $3.4 million for 1996. The decrease in capital expenditure amounts
reflects the significant capital expenditures made in 1996 and prior periods
that provided sufficient network capacity and therefore reduced capital
expenditure requirements in 1997.
Year Ended December 31, 1996 Compared to the Year Ended December 31, 1995
Operating Revenues. Services revenues were $43.4 million in 1996 compared to
$40.0 million for 1995. The increase in revenue reflects a 21% increase in
active units that resulted from the signing of several new contracts.
Revenue from the sale of radio data terminals and consulting services
increased to $1.9 million in 1996 from $1.3 million in 1995. The introduction
of wireless PCMCIA modems in 1996 contributed to this increase.
Costs and Expenses. Total costs and expenses decreased approximately 9%
during 1996 compared to 1995. Cost of services and operations for 1996 were
$32.8 million, a decline from $39.9 million in 1995. This dollar decrease was
attributable to (i) reduced headcount and personnel related costs as a result
of network consolidation completed during the first quarter of 1996, (ii)
reduced consulting expenses related to network enhancements for horizontal
applications anticipated during 1995, and (iii) reduced support costs
associated with fewer capital expenditure installations. Costs of services and
operations for 1996 and 1995 as a percentage of operating expenses were 44%
and 49%, respectively.
The cost of equipment sold in 1996 decreased to $1.4 million from $1.9
million in 1995, representing 2% of operating expenses in both periods.
Sales and marketing expenses were $13.7 million in 1996, a decline from
$15.2 million in 1995. This decline was attributable primarily to (i) reduced
headcount and personnel related costs associated with decreases in sales and
marketing staff supporting horizontal market programs and (ii) decreased
advertising and promotion activities. Sales and marketing costs as a
percentage of operating expenses were 18% in 1996 and 19% in 1995.
General and administrative expenses for 1996 were $9.4 million, a decline
from $10.6 million in 1995. This decline was attributable to reduced headcount
and personnel related costs associated with the operations consolidations and
other restructuring activities in the fourth quarter of 1995. As a percent of
operating expenses, general and administrative expenses represented 13% in
1996 and 1995.
Depreciation and amortization expense in 1996 was $17.3 million, compared to
$14.4 million in 1995, representing approximately 23% and 18% of operating
expenses in 1996 and 1995. The dollar and percent increase in depreciation and
amortization was the result of depreciation of network assets installed and
frequencies purchased in 1994 and 1995.
Interest and Other Income. Net interest expense was $1.4 million in 1996
compared to $0.2 million in 1995. Lower available cash balances in 1996
reduced the amount of interest income earned during the period.
Capital Expenditures. Capital expenditures, including additions financed
through capital leases, were $4.8 million in 1996 compared to $42.4 million in
1995. The decrease reflects (i) the build-out of several 19.2 protocol base
station layers in 1995, (ii) the replacement of the system's network
controllers during 1995, and (iii) the acquisition, in 1995, of a capital
lease for switching equipment in the amount of $18.8 million.
LIQUIDITY AND CAPITAL RESOURCES
American Mobile and ARDIS have incurred significant operating losses and
negative cash flows in each year since they commenced operations, due
primarily to start-up costs, the costs of developing and building their
networks and the cost of developing, selling and providing products and
services. American Mobile historically has financed its cash requirements for
operations and investments through private equity contributions, sales of
public equity securities, equipment financing arrangements and other
borrowings, including its existing $200
46
<PAGE>
million Bank Facility. ARDIS has financed its cash requirements primarily
through equity contributions from Motorola since 1994.
From 1994 to 1997, American Mobile and ARDIS have generated combined
historical cumulative negative cash flow from operations of $(360.4) million.
However, as the result of increased subscribers, reduced overhead and cost-
cutting efforts, negative combined cash flow from operations declined to
$(22.8) million for the three months ended March 31, 1998 from $35.8 million
for the comparable period in 1997. In addition, American Mobile's and ARDIS'
combined historical capital expenditures, which totaled $223.4 million from
1994 to 1997, have declined from $126.1 million in 1995 to $10.3 million in
1997. Combined historical capital expenditures for the three months ended
March 31, 1998 were $4.9 million compared to $1.8 million for the comparable
period in 1997. Management anticipates that the cash required to fund capital
expenditures for fiscal 1998 will be $14.0 million, the majority of which will
be spent in connection with the continued buildout and upgrade of the
terrestrial network to accommodate increased subscribers and FCC mandated site
installations.
The following tables summarize the historical cash flow statements of
American Mobile and ARDIS.
AMERICAN MOBILE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------- -------------------
1995 1996 1997 1997 1998
-------- --------- -------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Cash used in operations... $(60,412) $(141,826) $(80,471) $(34,665) $ (18,109)
Cash (used in) provided by
investing (1)............ (83,945) 50,946 (8,598) (3,574) (165,508)
Cash provided by financing
activities............... 142,360 84,198 88,993 37,629 202,790
</TABLE>
- --------
(1) In the third quarter of 1996, American Mobile received $66.0 million in
proceeds for insurance claims filed in connection with an anomaly in MSAT-
2.
ARDIS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------- --------------------
1995 1996 1997 1997 1998
-------- -------- ------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Cash (used in) provided by
operations................ $(28,215) $(18,666) $ 593 $ (1,117) $(4,645)
Cash (used in) provided by
investing................. (23,535) (4,806) (1,736) (1,517) (1,314)
Cash provided by (used in)
financing activities...... 42,700 21,776 (2,064) 1,500 7,341
</TABLE>
The Company believes the net proceeds from the Units Offering after cash
used for the Acquisition together with borrowings under the Revolving Credit
Facility and the Vendor Financing Commitment, will be sufficient to fund
operating losses, capital expenditures, working capital, and scheduled
principal and interest payments on debt through the time when the Company
expects to generate positive free cash flow (operating cash flow less capital
expenditures). If the Company does not meet its projections or if the
Revolving Credit Facility or the Vendor Financing Commitment is not available
for any reason, it would require any additional financing to meet its business
plan. There can be no assurance that the Company's current projection of
operating cash flow will be accurate.
The Company does not have a significant source of liquidity other than the
Revolving Credit Facility and the Vendor Financing Commitment. As of April 30,
1998, the Company had $95.0 million available to be borrowed under the
Revolving Credit Facility. However, borrowings under the Revolving Credit
Facility are subject to certain conditions beginning in the fourth quarter of
1998. In the event the Company is unable to borrow amounts under the Revolving
Credit Facility, the Company's cash needs will significantly exceed its
available resources, which would have a material adverse effect on the
Company. The obligations of the
47
<PAGE>
Company under the Revolving Credit Facility are guaranteed by Hughes,
Singapore Telecom and Baron Capital Partners, L.P., each of whom has
substantially greater resources than the Company. However, such guarantees are
subject to certain conditions, including the continuing compliance by the
Company with certain financial and other covenants. Failure to continue to
satisfy such covenants could result in the termination of such guarantees,
which would constitute an event of default under the Revolving Credit
Facility. In such event, the lenders under the Revolving Credit Facility would
not be obligated to advance funds thereunder and would have the right to
accelerate the indebtedness thereunder. There can be no assurance that the
Company would be in a position to refinance the Revolving Credit Facility in
such circumstances. See "Risk Factors--Liquidity; Need for Additional
Capital," and "--Substantial Leverage."
The Revolving Credit Facility is a $100.0 million line of credit that is
available for capital expenditures, working capital requirements and general
corporate purposes. The commitment under the Revolving Credit Facility will be
reduced $10.0 million per quarter beginning the quarter ending June 30, 2002
and will mature on March 31, 2003. See "Description of New Bank Financing."
On December 4, 1997, Holdings and American Mobile entered into an agreement
with ACTEL to lease the Company's satellite for deployment over sub-Saharan
Africa. The five year lease provides for aggregate payments to Holdings of
$182.5 million. Simultaneously, Holdings agreed with TMI to acquire a one-half
ownership interest in TMI's satellite at an aggregate cost of $60.0 million to
be paid over five years. Management expects that if both agreements are
consummated, the net cash benefit to Holdings after the payment of associated
net expenses will be approximately $41.0 million in 1998 and approximately
$66.0 million over the remaining terms of the agreements. The first $25.0
million of net proceeds plus 75% of any net proceeds in excess of $25.0
million will be utilized to pay down the Revolving Credit Facility and reduce
commitments. The remaining 25% of the net proceeds in excess of $25.0 million
will be utilized to support the Company's operations. While it is anticipated
that these transactions will improve the Company's leverage and liquidity,
there can be no assurance that such transactions will be consummated
simultaneously, if at all.
Motorola has agreed to provide the Company with up to $10.0 million of
vendor financing, which will be available to finance up to 75% of the purchase
price of additional base stations needed to meet the buildout requirements of
the UPS Contract. Loans under this facility will bear interest at a rate equal
to LIBOR plus 7.0% and will be guaranteed by Holdings and each subsidiary of
the Company. The terms of such facility will require that amounts borrowed be
secured by the equipment purchased therewith. This commitment is subject to
customary conditions, including due diligence, and there can be no assurance
that the facility will be obtained by the Company on these terms or at all.
See "Risk Factors--Liquidity; Need for Additional Capital."
The Company is a wholly-owned subsidiary of Holdings, which has $100.0
million in aggregate principal amount of indebtedness under the Term Loan
Facility. Holdings is a holding company which has no assets other than the
capital stock of the Company and AMRC. Holdings currently owns 80% of the
capital stock of AMRC. In October 1997, WorldSpace, Inc. ("WorldSpace")
provided additional financing to AMRC that AMRC utilized to pay for its
Digital Audio Radio Services ("DARS") license. Through its investment in AMRC,
WorldSpace has an option to increase its ownership in AMRC to 72%, subject to
FCC approval. It is anticipated that the proceeds resulting from the exercise
of the option will not be available to either Holdings or the Company. As a
result of its arrangements and discussions with WorldSpace, AMRC will not be
consolidated with the financial results of Holdings. See "Business--AMRC." The
Company will utilize approximately $17.9 million of the proceeds of the Units
Offering to repay advances from Holdings, which is intended to provide for the
payment of Holdings' interest payments on the Term Loan Facility for three
years. Holdings anticipates that such amount, together with interest earned
thereon, will be sufficient to fund debt service on the Term Loan Facility for
a period of approximately three years. From and after April 1, 2001 (three
years after the date of the Indenture), it is expected that the Indenture will
permit the Company to make dividend payments to Holdings in amounts which are
sufficient to permit Holdings to service its cash interest requirements under
the Term Loan Facility, subject to certain restrictions. The Company may pay
other dividends to Holdings for routine administrative expenses. See
"Description of the Exchange Notes--Certain Covenants--Restricted Payments."
48
<PAGE>
The obligations of Holdings under the Term Loan Facility are severally
guaranteed by Hughes, Singapore Telecom and Baron Capital Partners, L.P., each
of whom has substantially greater resources than the Company. However, such
guarantees require the Company to meet certain conditions, including the
continuing compliance of Holdings with certain financial and other covenants.
Failure to continue to satisfy such covenants could result in an event of
default under the Term Loan Facility. In such event, the lenders under the
Term Loan Facility would not be obligated to advance funds thereunder and
would have the right to accelerate the indebtedness thereunder. There can be
no assurance that Holdings would be in a position to refinance the Term Loan
Facility in such circumstances. See "Risk Factors--Holdings' Guarantee."
The Company is highly leveraged. The Indenture permits the Company and its
subsidiaries to incur additional Indebtedness under certain circumstances and,
to a limited extent, to secure such Indebtedness with liens on the assets
securing such Indebtedness. The ability of the Company and its subsidiaries to
make scheduled payments with respect to Indebtedness (including the Notes)
will depend upon, among other things, the Company's ability to complete any
necessary additional financing, the continued deployment of its network on a
timely and cost-effective basis, the market acceptance and customer demand for
the Company's products and services and the future operating performance of
the Company. Each of these factors is, to a large extent, subject to economic,
financial, competitive, regulatory and other factors, many of which are beyond
the Company's control. If the Company does not generate sufficient increases
in cash flow from operations to repay the Notes at maturity, it could attempt
to refinance the Notes; however, no assurance can be given that such a
refinancing would be available on terms acceptable to the Company, or at all.
Any failure by the Company to satisfy its obligations with respect to the
Notes at maturity (with respect to payments of principal) or prior thereto
(with respect to payments of interest or required repurchases) would
constitute a default under the Indenture and could cause a default under
agreements governing other Indebtedness, if any, of the Company. See "Risk
Factors--Substantial and Continuing Operating Losses;" "--Liquidity; Need for
Additional Capital;" "Description of the Exchange Notes--Certain Covenants--
Incurrence of Indebtedness and Issuance of Preferred Stock."
49
<PAGE>
BUSINESS
OVERVIEW
The Company is a leading provider of nationwide wireless communications
services, including data, dispatch, and voice services, primarily to business
customers in the United States. The Company offers a broad range of end-to-end
wireless solutions utilizing a seamless network consisting of the nation's
largest, most fully-deployed terrestrial wireless data network and a satellite
in geosynchronous orbit. On a pro forma basis, the Company had service revenue
of $62.1 million in 1997 and approximately 85,200 customer units in service at
March 31, 1998. In addition, the Company has recently signed customer
contracts, subject to certain conditions, that it believes will result in the
activation of in excess of 100,000 new units over the next three years.
Through Holdings, the Company's major equity investors include Hughes,
Motorola, Singapore Telecom and AT&T Wireless, who in the aggregate will own
approximately 61.4% of Holdings on a fully diluted basis.
MARKET OPPORTUNITY
The Company expects to capitalize on the substantial and growing market for
wireless data communications services, which Strategis estimates grew at a
compound annual unit growth rate of 28% from 1994 to 1997. Strategis further
estimates that the addressable market for wireless data products is composed
of approximately 12.5 million mobile workers in occupations such as
transportation and field services, with significant wireless communication and
data access needs, and that approximately 10.4 million of these workers will
use some form of mobile data service by 2001. Strategis estimates that
approximately 2.0 million workers currently use some form of mobile data
service, primarily analog cellular service. The Company believes this growth
is being driven by the widespread acceptance of Internet and intranet
applications, logistical requirements for just-in-time delivery and position
location services, development of more compact, less expensive user devices,
and a significant increase in the use of data applications such as e-mail.
The following table identifies the Company's target markets for its services
and provides an estimate, based on the market research of Strategis, of the
potential addressable market size:
<TABLE>
<CAPTION>
FIELD OTHER
TRANSPORTATION SERVICES MOBILE WORKERS TOTAL
-------------- -------- -------------- ------
<S> <C> <C> <C> <C>
Market Size:
(Units in thousands) 1,600 1,700 9,200 12,500
</TABLE>
In addition to these targeted mobile workers, there is a significant market
for the Company's products in non-mobile environments such as wireless
telemetry. Strategis estimates that there are over 96 million control and data
collection points, such as utility meters, which are directly addressable by
the Company's services. Further, the Company markets its services to the
maritime industry, which is estimated to have an addressable market of 218,000
vessels.
Transportation
In the transportation industry, the Company focuses primarily on wireless
data solutions for the trucking market. The types of companies that comprise
this market are private and for-hire fleet operators and owner-operators. For-
hire carriers are companies whose primary business is trucking and whose
revenues are from transporting goods via trucks on a contractual basis.
Private fleets are operated by non-trucking firms that haul their own freight.
Owner/operators are individuals who own and operate their own trucks. Some
owner/operators work for a single company under a lease agreement while others
work with transportation brokers to find loads or operate their own small
transportation businesses. Leasing for hire companies generally lease their
vehicles on a temporary basis ranging from hours to weeks or more. Owner
operators, private fleets, and leasing-for-hire operators provide services in
both the long-haul and less-than-truckload ("LTL") segments. Package Delivery
carriers are firms engaged in the delivery of documents, small packages and
freight on a time sensitive basis.
50
<PAGE>
TRANSPORTATION--1.6 MILLION ADDRESSABLE UNITS
<TABLE>
<CAPTION>
LESS THAN OWNER PRIVATE LEASING FOR PACKAGE
TRUCKLOAD TRUCKLOAD OPERATORS CARRIERS HIRE DELIVERY
--------- --------- --------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Characteristics: Point-to- Short haul, Contract Internal Outsourced Largest
point, haul irregular service company suppliers of overnight
lengths route, to long- fleets private and 2-3 day
greater than multiple haul and fleet delivery
100 miles stop LTL services firms, high
logistic
requirements
Market Size:
(Units in thousands) 347 200 62 439 284 230
</TABLE>
In addressing the trucking market, the Company initially focused on the
needs of the long-haul trucking segment. This segment is characterized by
large trucks hauling loads in excess of 100 miles with shipments being sent
directly from sender to receiver. In order to meet the data and location
positioning demands resulting from regulatory and environmental initiatives
and just-in-time inventory requirements, this segment was the first to adopt
two-way wireless communication systems. At the present time, it is estimated
that there exists an installed base of approximately 200,000 mobile
communications units (including those sold by the Company) in trucking fleets
operating in the United States. The Company's customers in this segment employ
the Company's products to improve fleet asset utilization, reduce non-revenue
producing miles and achieve on-time deliveries.
The Company believes that the pressures for regulatory compliance and on-
time delivery will also affect the LTL market. This market is characterized by
shipments that are typically picked up by a carrier at a terminal, moved as
part of a larger load, sorted at a destination terminal and then delivered. It
is expected that as LTL carriers respond to the need for improved operating
efficiencies and responsiveness they will adopt wireless communications
solutions. The Company believes that its multi-mode product is well matched to
the higher volume data requirements of LTL carriers given its ability to
provide service in areas not covered by existing satellite-only and
terrestrial-only competitors and the lower average usage charges of the
Company's terrestrial and satellite network.
Field Services
The "mobile workforce," that portion of U.S. workers whose occupations
require them to spend significant portions of their time outside of their
offices, has grown rapidly in response to customer demands for greater
responsiveness and flexibility. Companies' ability to meet these demands have
been enhanced by the emergence of distributed computing and mobile
communications. The field service market, which is a subset of the overall
mobile workforce, is comprised of groups of workers who install, move and
maintain property, plant, and equipment in field operations or at customer
premises. Field service organizations realize significant benefits from the
use of wireless applications. Typically, these organizations are able to
improve the speed and quality of their work while reducing costs through the
applications of wireless technology.
Strategis estimates that there are approximately 1.7 million field service
workers who are directly addressable by the Company's products. The field
service category can be subdivided into two broad subsegments, in-building and
vehicle-based, each of which has different product requirements.
51
<PAGE>
FIELD SERVICE--1.7 MILLION ADDRESSABLE UNITS
<TABLE>
<CAPTION>
IN-BUILDING VEHICLE-BASED
----------- -------------
<S> <C> <C>
Characteristics: Repair personnel, Primarily outdoor, team-
installers, contractors, oriented and contingency
and engineers using based operators in the
primarily data telecommunications,
applications for single utility and petroleum
worker dispatch and industries typically
database query using voice dispatch
applications. applications.
Market Size:
(Units in thousands) 1,100 600
</TABLE>
There are approximately 1.1 million field service workers in the United
States who spend a significant amount of time maintaining in-building assets,
such as computer systems. Real-time dispatching allows for the dynamic
redistribution of service calls and ready access to offsite databases and
technical expertise, thereby improving the productivity of a customer's field
service force by eliminating non-productive time spent away from the worksite.
There are approximately 0.6 million vehicle-based field service workers in
the United States who maintain field assets, such as an oil pipeline, over
wide geographic regions. These employees often work in remote areas and
frequently operate on a contingency, rather than scheduled, basis. Operators
of vehicle-based field service fleets employ mobile communications in order to
resolve contingencies through coordination of activity and to increase
productivity through prompt access to technical support.
Other Mobile Workers
The remaining addressable market for mobile data services consists of a
broad array of mobile workers with significant requirements for mobile data
communication and access capabilities. This larger market segment contains
approximately 9.2 million mobile workers in industries and functions including
manufacturing, wholesale and retail trade, and insurance. The majority of
users within this segment do not require integrated connection with
centralized systems, but still have a need for wireless data communication,
such as email. Because these applications are generic across numerous
industries, the segment is horizontally addressable. The Company intends to
address these workers through a broad distribution strategy, offering its
small, low priced two-way messaging product.
Other mobile workers also include employees of federal, state and local
governments and public safety organizations who employ mobile communications
to coordinate both daily activities and disaster responses. These agencies and
organizations generally make use of a combination of various self-provided and
commercially available wireless services in order to ensure high levels of
availability and reliability.
Maritime
The maritime market consists of three major addressable segments: merchant
vessels, fishing vessels, and recreational vessels.
MARITIME--218,000 ADDRESSABLE UNITS
<TABLE>
<CAPTION>
MERCHANT FISHING RECREATIONAL
-------- ------- ------------
<S> <C> <C> <C>
Characteristics: U.S.-flagged Fishing vessels over Large recreational
commercial merchant 5 gross tons vessels
vessels
Market Size:
(Units in
thousands) 16 35 167
</TABLE>
52
<PAGE>
Merchant vessels are operated by firms to transport goods and perform other
functions. As with truck transportation firms, merchant vessels utilize mobile
communications to increase operating efficiencies and load factors. The
Company targets approximately 16,000 large, U.S.-flagged vessels. Fishing
vessels weighing over 5 gross tons and operated by individuals and firms in
U.S. waters number approximately 35,000. Fishing operators who have adopted
mobile communications gain increased efficiencies from coordination with other
vessels and with shore-based personnel. Recreational vessels are comprised of
approximately 167,000 craft that make use of mobile communications both to
extend the utility of terrestrial wireless communications and for navigational
and safety purposes.
Wireless Telemetry
Wireless telemetry applications facilitate data connectivity between remote
equipment and a central monitoring facility. The wireless telemetry market
consists of several major industry applications, including automatic meter
reading, business alarm monitoring, oil and gas wellhead and pipeline
monitoring, and vending machine, agricultural, and environmental asset
monitoring. Strategis estimates that approximately 96 million control and data
collection points will be connected to monitoring facilities via wireless data
communications services by 2002. As of mid-1997, according to Strategis, in
excess of 8.4 million control and data points had been connected to monitoring
facilities via wireless data communications services.
Other Market Segments
Electronic funds transfer and point-of-sale ("EFT/POS") applications are
creating an emerging market segment for wireless communications. There are two
segments within the broad market where a wireless solution can be applied to
EFT/POS applications. The first segment is an environment in which the
wireless EFT/POS solution can replace the wireline offering, such as fast food
franchises, for example. The second segment includes those applications for
which wireline connectivity is not an option, such as taxi and limousine
services. MasterCard and VISA predict over 800,000 wireless POS terminals to
be in use in the next 2 to 5 years.
Other market segments addressed by the Company's offerings include remote
fixed site, news gathering, recreational vehicles, and business and general
aircraft. The common application among these segments is satellite telephony,
including facsimile and circuit switched data. The Company has developed a
customer base in each of these segments, and has in some cases sponsored the
development of unique equipment configurations designed to meet the needs of
specific user environments.
BUSINESS STRATEGY
The Company's objective is to maximize its revenues by delivering value-
added services to end users in specific segments. To meet this objective and
to capitalize upon the competitive advantages resulting from the combination
of American Mobile and ARDIS, the Company intends to: (i) offer business
customers a broad range of nationwide wireless service and end-to-end data
solutions; (ii) integrate and leverage the advantages of its nationwide
terrestrial and satellite data networks; (iii) enhance market penetration by
lowering the customers' "total cost of ownership"; and (iv) expand the use of
alternative distribution channels to accelerate network loading.
Offer Business Customers a Broad Range of Nationwide Wireless Solutions. The
Company believes its corporate customers prefer a single-source service
provider capable of delivering a broad range of efficient and cost effective
solutions to meet their need for mobile wireless communications. The Company
believes that it has and will continue to have a unique strategic advantage in
being able to provide one-stop shopping across a broad range of products,
including two-way paging and advanced messaging, packaged e-mail and LAN
solutions, custom data applications, dual mode terrestrial/satellite data, and
satellite voice and dispatch functions. Through its staff of approximately 230
direct sales, engineering support and customer service professionals, the
Company provides a suite of bundled wireless services, and a single point of
contact for sales, service, billing and project management, all on a national
basis.
53
<PAGE>
Integrate and Leverage Network Advantages. The Company has spent over a
decade developing and deploying its nationwide terrestrial and satellite
networks and now seeks to accelerate its growth by leveraging its integrated
network. Unlike many competitors with plans to build out limited city-wide or
regional terrestrial networks or to launch satellites, the Company's
technology infrastructure is in place and operational today, with future
network expansion requirements arising primarily from increased customer
demand. The Company believes that this integrated terrestrial/satellite
network provides key competitive advantages currently unmatched by any
competitor: virtually 100% nationwide geographic coverage, guaranteed message
delivery, and, in the areas covered by the ARDIS network, deep in-building
penetration. By integrating the operations of its terrestrial and satellite
networks, the Company expects to achieve operating efficiencies and economies
of scale that it believes will lead to improved operating margins.
Enhance Market Penetration By Reducing Customers "Total Cost of
Ownership." Historically, the most significant obstacle to the implementation
of enterprise-wide wireless data applications has been the relatively high
total cost of ownership. The total cost of ownership is comprised of three
primary elements: the cost of the subscriber unit, the required investment in
software development, and the monthly cost of network access and usage. In
most of the Company's applications, the monthly cost of network access and
usage has been the least prohibitive of these elements. Until recently,
subscriber unit costs in excess of $3,000 and custom software investments of
up to several million dollars were common. By working with business partners
and vendors, and making strategic software investments, the Company has
succeeded in significantly lowering customers' total cost of ownership. New
subscriber units, including low-cost two-way messaging units and laptop modem
cards, are now available for $500 or less and substantial development work is
underway with several of the Company's vendors to accelerate reductions of
equipment cost, unit weight and size. In the future, the Company expects that
the increased subscriber unit volumes associated with recent large contract
awards will lead to additional unit price reductions. In addition, customers
can now use off-the-shelf software applications that are relatively
inexpensive, or in the case of the Company's two-way messaging service, free.
The Company believes that these lower price points will accelerate the
adoption of the Company's services in its historical markets, and will enable
the Company to develop new markets, such as wireless point-of-sale and
telemetry.
Expand Alternate Distribution Channels. The Company sells its services
primarily through a direct sales force and resellers. In order to accelerate
network loading, the Company expects to expand its use of indirect
distribution channels. To date, the Company has entered into agreements with
Enron. (utility monitoring), Ameritech SecurityLink (alarm monitoring), Global
Payment Systems (point-of-sale), GE Logisticom (asset tracking and
dispatching) and other value-added resellers to penetrate markets where such
resellers have a market presence and significantly greater resources than the
Company, including dedicated sales personnel. In addition, the Company is in
the process of establishing relationships with existing paging companies,
paging resellers, and other targeted distribution partners to market two-way
guaranteed messaging services. The Company believes that the resale of its
network is an alternative that paging companies will consider when assessing a
move from one-way to two-way messaging because it may reduce or eliminate the
need for additional investment in network infrastructure. The Company intends
to utilize paging companies and other similar partners with well established
distribution capabilities to develop markets outside of the Company's
historical market segments.
54
<PAGE>
PRODUCTS AND SERVICES
The Company believes that it is well-positioned to provide a broad range of
end-to-end wireless data and voice solutions to business customers in the
United States.
Data Services
The Company's data messaging services enable communications between groups
of mobile or fixed data terminals and a single "hub." Current applications
include one-way and two-way messaging, wireless Internet e-mail and integral
GPS and reporting of such data.
<TABLE>
<CAPTION>
NETWORK APPLICATION PRIMARY MARKET SEGMENTS CUSTOMERS AND RESELLERS SERVICE BENEFITS
------------------- ----------------------- ----------------------- ----------------
<S> <C> <C> <C>
Multi-Mode Transportation Sitton Motor Lines Least cost routing
CRST and ubiquitous
Tandem Transport satellite coverage
Terrestrial Field services IBM Nationwide coverage
only Sears and deep in-
Lucent building
Pitney Bowes penetration
NCR
Transportation UPS Fully deployed
Conway nationwide two-way
GE Logisticom network
Two-Way Messaging ConectUS Nationwide coverage
IKON Office Systems and deep in-
building
penetration
Telemetry Enron Energy Services Low cost off-peak
Ameritech SecurityLink transmission
Satellite Transportation Cannon Express Conway Less expensive
only Truckload Services equipment costs
relative to multi-
mode
</TABLE>
Multi-mode Messaging. The Company's multi-mode communications system uses
its terrestrial and satellite network to provide "least-cost routing" for
customers' two-way data communications by actively seeking connections to the
lower cost terrestrial network before automatically using the Company's
satellite network thereby providing nationwide coverage. The Company believes
that its multi-mode data and global position tracking services will enable it
to bring cost-effective solutions to the long-haul trucking customers as well
as the broader transportation industry, including the less-than-truckload and
package delivery segments.
Terrestrial-Only Data. The Company offers a variety of end-to-end wireless
data solutions to customers primarily in vertical market segments, including
the field service and transportation markets. The Company's network provides a
breadth of coverage that the Company believes is significantly greater than
that of any competing network and offers deep in-building penetration,
efficient frequency reuse, and reliable two-way data communications. Typical
applications of the service include call dispatch, asset tracking, peer-to-
peer communications, Internet e-mail and fax capabilities. The Company
recently introduced a two-way messaging service that provides guaranteed
message delivery, personal acknowledgment, pre-set and custom message reply
and complete custom message origination using the RIM Interactive Pager(TM).
In addition, software firms such as Nettech, Racotek, IBM and BHA have
developed "middleware" which helps to significantly minimize the customer's
development effort in connecting the customer's application to the Company's
network. A number of off-the-shelf software packages such as Motorola's
AirMobile Wireless Software for Lotus cc:Mail(TM), Lotus Notes(TM) and IKON's
Mobile CHOICE(TM) for Windows enable popular e-mail software applications on
the Company's network.
55
<PAGE>
Satellite Messaging. The Company's satellite mobile messaging service is
offered as an alternative to the multi-mode product for customers in the long-
haul trucking segment. Customers with broad network coverage requirements but
relatively low usage requirements can reduce their total cost of ownership by
subscribing to the Company's satellite messaging service.
Voice Services
The Company offers mobile voice services through two primary services:
nationwide dispatch service and satellite telephone service.
<TABLE>
<CAPTION>
NETWORK APPLICATION PRIMARY MARKET SEGMENTS CUSTOMERS SERVICE BENEFITS
------------------- ----------------------- --------- ----------------
<S> <C> <C> <C>
Dispatch Field Services AT&T Only provider of
MCI nationwide dispatch
Williams Companies services
Telephony Maritime Maritime Cellular Low cost maritime
Seven Seas telephony service
Other CBS Reliable, remote
Red Cross mobile coverage
FEMA
</TABLE>
Nationwide Dispatch Service. Nationwide dispatch service provides point-to-
multi-point voice communications among users in a customer-defined group using
a push-to-talk device. This service is designed to facilitate team-based,
contingency-driven operations of groups operating over wide and/or remote
areas. The Company markets the dispatch service to businesses that have wide-
area operational requirements that are under-served by a similar point-to-
multi-point capability. These targets include: oil and gas pipeline companies;
utilities and telecommunications companies with outside maintenance fleets;
state and local public safety organizations operating in under-served areas;
and public service organizations with a requirement to seamlessly link
resources on a nationwide basis.
Satellite Telephone Service. Satellite telephone service supports two-way
circuit-switched voice, facsimile and data services. The Company offers a wide
range of satellite phone configurations developed to address the particular
communications needs of customers. The Company markets the telephone service
to businesses that have nationwide coverage requirements, including those
operating in geographic areas that lack significant terrestrial coverage,
including natural resource companies, utilities and telecommunications
companies that require backup and restoral support, public safety
organizations, and maritime users seeking expanded or less costly coverage for
both commercial and recreational vessels.
PRICING
The Company prices its services on an access fee and variable usage fee
basis. Volume packages that include increments of free usage in exchange for
higher, fixed access fees, as well as volume discounting plans are also
available.
Data Products
Multi-mode users are charged a monthly access fee that includes a fixed
increment of both terrestrial and satellite usage, as well as a set number of
vehicle location reports. Usage beyond the fixed increment is metered and
charged on a variable basis depending on the length and mode of transmissions.
Customers are typically charged less for terrestrial usage than for satellite
usage. Satellite and terrestrial messaging services are priced under similar
structures, and offer a wide variety of volume packaging and discounts,
consistent with the demands of the targeted markets. The average monthly bills
for the Company's data customers range from below $10 for high unit quantity,
low traffic volume, off-peak telemetry users, to over $60 for high volume,
peak users in the field service market. The Company's average monthly revenue
per data user in the fourth quarter of 1997 was approximately $55.
56
<PAGE>
Voice Products
The Company's nationwide dispatch users are charged a fixed access fee for
virtually unlimited usage, while satellite telephone users are charged both
fixed access and variable usage fees. Monthly bills for satellite voice
customers range from over $150 for high volume maritime users to a low of $50
for certain public safety and emergency restoral applications. The Company's
current average monthly revenue per voice user in the fourth quarter of 1997
was approximately $135.
MARKETING AND DISTRIBUTION
The Company markets its services through four primary distribution channels:
direct sales, vertical resellers, horizontal resellers and dealers.
Direct Sales
The Company has a direct sales force of 60 employees who focus on the
requirements of business customers. This sales organization is comprised of a
national accounts group that profiles and targets specific Fortune 500
accounts, and a network of regionally based representatives who specialize in
specific industry segments. The direct sales representatives have acquired
significant industry expertise, and use that expertise in a solutions-oriented
sales approach. Sales to national account targets generally require a
sustained marketing effort lasting several months. Prior to making a buying
decision, a majority of the accounts exercise a due diligence process where
competitive alternatives are evaluated. The Company's employees often assist
in developing justification studies, application design support, hardware
testing, planning and training.
Vertical Resellers
In order to penetrate quickly certain market segments characterized by
specialized technical requirements and/or unique business applications, the
Company leverages the capabilities of specialized distribution partners. These
relationships enable the Company to penetrate new market segments without
investing in the product, training and development requirements typically
associated with entry into a new market segment.
The Company's resale arrangements are specifically designed to accelerate
entry into the wireless telemetry (utility and alarm monitoring), point-of-
sale, maritime and government market segments. Resellers of the Company's
products within the wireless telemetry market include Enron for commercial
utility meter reading, and Ameritech SecurityLink for alarm monitoring. The
Company also has a relationship with Global Payment Systems for wireless
point-of-sale applications. These business partners are responsible for
development of the end-user solutions, and purchase capacity on the Company's
data network.
VASPs represent one of the Company's primary distribution channels for
maritime satellite telephony. VASPs purchase bulk minutes, resell at a margin,
set the price, take risk of collection and perform all service and billing
functions.
The Company currently utilizes three specialized government resellers, one
of which has included the Company's products on the general services
administration schedule. The Company intends to expand the distribution
opportunities for its terrestrial data products by also including them in
these programs.
The Company also has various PNCs that purchase bulk satellite capacity from
the Company in the form of dedicated capacity increments or channels. PNCs use
this capacity to support their own proprietary networks and products, and
maintain all associated business risks and responsibilities.
Horizontal Resellers
The Company utilizes a series of resale relationships designed to reach a
large segment of the mobile workforce that does not require integration with
centralized systems, but still has a broad need for two-way messaging and
wireless e-mail access. Because these applications are generic across numerous
industries, the
57
<PAGE>
segment is horizontally addressable, and requires some level of retail
presence. To achieve this presence, the Company is in the process of
establishing relationships with existing paging companies, paging resellers
and other targeted distribution partners to market two-way guaranteed
messaging services. The Company also maintains relationships with
manufacturers of personal handheld computing devices, who include the
Company's marketing material with the device packaging to provide the
purchaser the option of wirelessly enabling a handheld computing device.
Dealer Channels
The Company also uses land mobile and maritime dealers who distribute the
Company's nationwide dispatch and satellite telephony products. These dealers
typically have strong business relationships with regional public safety
entities, as well as with smaller field service fleets and maritime users. The
Company believes that opportunities exist to capitalize on the strengths of
this channel by introducing a low cost terrestrial data device with minimum
integration requirements, such as the RIM Interactive Pager(TM). Typically
these dealers serve as agents for sales and service and do not set pricing or
provide billing and collection services. These dealers are generally
compensated with a modest percentage of the service revenue for which they are
responsible.
CUSTOMERS
As of December 31, 1997, the Company had approximately 81,300 units in
service and an established customer base of large, established corporations
including AT&T, Avis, Bank of America, IBM, JB Hunt, Lucent, MCI, NCR, Otis
Elevator, Pitney Bowes, Sears, Siemens and The Williams Companies. The
Company's products also have been adopted by various emergency response
organizations such as the Federal Emergency Management Agency ("FEMA") and the
American Red Cross. The majority of the Company's customers sign long-term
contracts and make significant capital investments to initiate service. As a
result, the Company typically experiences low turnover of its customer base.
Additionally, during the fourth quarter of 1997, the Company was awarded two
significant new customer contracts: Enron and UPS. Enron will utilize the
Company as the network provider for a wireless utility monitoring service
targeted at commercial power users. Enron has committed to place a minimum of
55,000 units into service over the next three years. Management believes that
the UPS contract will result in approximately 50,000 units operating on the
terrestrial data network by the end of the year 2000. See "Risk Factors--UPS
Contract."
As of December 31, 1997, the Company's customer base included the following
market and product segments:
<TABLE>
<CAPTION>
PERCENT OF
MARKET SEGMENTS TOTAL UNITS
--------------- -----------
<S> <C>
Field Services.......... 48%
Transportation.......... 26
Telemetry............... 8
Maritime................ 4
Other................... 14
---
Total................... 100%
===
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
PRODUCT SEGMENTS TOTAL UNITS
---------------- -----------
<S> <C>
Data:
Terrestrial............. 60%
Satellite............... 12
Multi-mode.............. 8
Private Networks........ 7
---
Total Data............ 87
Voice:
Telephony............... 7%
Dispatch................ 4
Private Networks........ 2
---
Total Voice........... 13
Total..................... 100%
===
</TABLE>
58
<PAGE>
THE NETWORK
The Company's integrated network consists of (i) a satellite in
geosychronous orbit with coverage of the continental United States, Alaska,
Hawaii, Puerto Rico, the U.S. Virgin Islands and U.S. coastal waters and
airspace, and (ii) the largest two-way terrestrial data network in the United
States with coverage of over 425 of the largest cities and towns in the United
States, including virtually all metropolitan areas. The network provides a
wide range of mobile data and voice services in multi-mode and single-mode
configurations.
Users of the Company's terrestrial and satellite communications network
access the network through subscriber units that may be portable, mobile or
stationary devices. Generally, subscriber units enable either data or voice
communications and are designed to operate over either the terrestrial data-
only network or the satellite network, which provide both voice and data
communications. In addition, the Company's multi-mode subscriber equipment is
designed to provide least-cost routing of data messages over both the
terrestrial and satellite networks.
Subscriber units receive and transmit wireless data or voice messages from
either terrestrial base stations or the Company's satellite, MSAT-2.
Terrestrial messages are routed to their destination via Company-owned data
switches, which connect to the public data network. Satellite messages are
routed to their destination via satellite data and voice switches, located at
the Company's headquarters, which connect to the public data and switched
voice networks. A data switch located in Cedar Rapids links the terrestrial
and satellite networks for the delivery of the Company's multi-mode data
service. The terrestrial, satellite and multi-mode network interconnections
are depicted below.
[GRAPHIC IMAGE OMITTED SHOWING SATELLITE MULTI-MODE AND TERRESTRIAL NETWORK
INTERCONNECTIONS]
59
<PAGE>
The Company's terrestrial network delivers superior in-building penetration,
completion rates and response times compared to other wireless data networks
through the use of a patented SFR technology developed by Motorola. As
illustrated below, SFR technology enables multiple base stations in a given
area to use the same frequency. As a result, a message sent by a subscriber
can be received by a number of base stations. This technology contrasts with
more commonly used multiple frequency reuse ("MFR") systems which provide for
only one transmission path for a given message at a particular frequency. In
comparison with MFR systems, the Company's technology provides superior in-
building penetration and response times and enables the Company to
incrementally deploy additional capacity as required, instead of in larger
increments as required by most wireless networks.
[GRAPHIC IMAGE OMITTED DEPICTING SINGLE FREQUENCY RE-USE]
SATELLITE LEASE AND SATELLITE PURCHASE AGREEMENTS
On December 4, 1997, Holdings and American Mobile entered into an agreement
with ACTEL to lease the Company's satellite, MSAT-2, for deployment over sub-
Saharan Africa. The five-year lease provides for aggregate payments to the
Company of up to $182.5 million. Simultaneously, Holdings and American Mobile
agreed with TMI to acquire a one-half ownership interest in TMI's satellite at
an aggregate cost to American Mobile of $60.0 million.
Under the Satellite Purchase Agreement, TMI and the Company will each own a
50% undivided ownership interest in MSAT-1, will be jointly responsible for
the operation of the MSAT-1, and will share certain satellite operating
expenses, but will otherwise maintain their separate business operations.
Closing under the Satellite Purchase Agreement and Satellite Lease Agreement
is subject to a number of conditions, including: United States and Canadian
regulatory approvals; a successful financing by ACTEL of at
60
<PAGE>
least $120 million; completion of certain satellite testing, inversion and
relocation activities with respect to American Mobile's satellite, to support
the contemplated services over Africa; receipt of various government
authorizations from Gibraltar, South Africa and other jurisdictions to support
satellite relocation, including authorization with respect to orbital slot and
spectrum coordination; and completion of certain system development activities
sufficient to support satellite redeployment. It is anticipated that the
closing under both agreements will occur simultaneously in the spring of 1998.
While the Company believes that if ACTEL defaults under the Satellite Lease
Agreement, the Company would be able to achieve the return of MSAT-2 from
ACTEL to its operation in the United States and terminate its payment
obligations to TMI under the Satellite Purchase Agreement, there can be no
assurances that such actions can be achieved. In addition, there can be no
assurance, however, that such transactions will be consummated simultaneously,
or at all.
If consummated, the transactions are expected to increase substantially the
Company's cash flow, without affecting its ability to serve and grow its
customers based on expected capacity available on MSAT-1 (including excess TMI
capacity available to the Company for purchase). Net proceeds from the
transactions will be used to reduce amounts outstanding under the Company's
Revolving Credit Facility and provide for additional liquidity. See "Risk
Factors--Satellite Lease and Purchase Agreement Risks," "Management's
Discussion and Analysis of Financial Condition and Result of Operations--
Liquidity and Capital Resources" and "Description of New Bank Financing."
EQUIPMENT; SUPPLIER RELATIONSHIPS
The Company has contracts with multiple vendors to supply equipment
configurations designed to operate on each of its operating platforms. These
devices are designed to meet the requirements of specific end-user
applications. The Company continues to pursue enhancements to these devices
that will result in additional desirable features and reduced cost of
ownership. Although many of the components of the Company's products are
available from a number of different suppliers, the Company does rely upon a
few key suppliers. See "Risk Factors--Reliance on Third Party Vendors."
In connection with its mobile data communications service, the Company
presently has an agreement with Trimble Navigation, Inc. to supply its
satellite data unit. In addition, multi-mode data terminals are sourced from
Rockwell. The Company also has contracted with Vistar, Inc., a Canadian
company, for the development of a new multi-mode terminal. The new terminal
will incorporate design changes that will simplify the installation process
and allow for the addition of enhancements in a modular fashion. The Company
believes that the price of multi-mode terminals will continue to decline in
the coming years.
There are currently over 30 different types of subscriber units available
from 15 manufacturers that can operate on the terrestrial network. Examples of
portable subscriber units include ruggedized laptop computers, small external
modems, handheld or palmtop "assistants," pen based "tablets," and two-way
messaging devices, such as the RIM Interactive Pager(TM). Significant
developers of devices that are compatible with the network include Motorola,
RIM and Itronix. Motorola and RIM manufacture modems designed to be integrated
into handheld field service terminals, telemetry devices, utility monitoring
and security systems as well as other computing systems. RIM recently has
developed the Interactive Pager(TM) that supports the Company's two-way
messaging service. Itronix manufactures the XC-6000, a fully ruggedized laptop
computer with a standard keyboard and an integrated wireless modem.
Mobile satellite voice telephones are offered in a number of different
configurations that deliver a variety of features and options to meet specific
market needs. Mobile satellite telephones are currently available in land
mobile vehicle installed, fixed site, maritime, aeronautical, dual mode
voice/direct to home satellite television and fully transportable (i.e.,
battery powered and packaged in a briefcase) configurations. Subscriber
equipment for satellite telephone service and nationwide dispatch service
includes data interface ports to allow connection to communications
accessories such as personal computers, and global positioning satellite
("GPS") tracking devices. Recent enhancements allow users to utilize the
dispatch product remotely from the vehicle, via a wireless tether. American
Mobile continues to add enhancements based upon customer requirements, and has
61
<PAGE>
several initiatives that could result in the reduced cost of end-user devices.
The primary suppliers for the voice equipment are Westinghouse Electric, Inc.
and Mitsubishi.
Tandem computer provides the ARDIS network switching computers under a
multi-year lease that extends through the year 2000, while AT&T provides
network services including a nationwide wireline data network, and leased
sites which house regional ARDIS switching equipment. The Company also has a
relationship with AT&T as its vendor for switched inbound and outbound public
switched telephone network services. The satellite system terminates calls
from its telephone product via both the AT&T and Sprint networks.
ARDIS has executed multiple agreements with Motorola that provide for
certain continued support from Motorola with respect to: supply and support
for the ARDIS DataTAC network infrastructure; ongoing maintenance and service
of the ARDIS base stations; and lease administration services for
approximately 37% of ARDIS' base station site leases. Additionally, Motorola
is expected to continue to manufacture modems compatible with the ARDIS
network infrastructure for use in end-user devices.
Hughes Network Systems Ltd, of the United Kingdom, manufactures and supports
the key component to the Company's multi-mode and satellite messaging
products, which is the Land Earth Station ("LES"). There are currently 4 LES's
operational. The platform for the Company's voice products, the communications
ground segment ("CGS"), depends upon products from multiple vendors, most of
which are generally commercially available. Northern Telecom manufactures and
supports the core voice switch. Digital Equipment Corporation supplies the
computing platform that runs the CGS.
COMPETITION
The wireless communications industry is highly competitive and is
characterized by frequent technological innovation. The Company competes on
the basis of providing comprehensive, end-to-end solutions and a premium level
of service in the markets it serves. End-to-end solutions have been assembled
working with a select group of business partners who develop and manufacture
software, middleware and hardware components. The Company differentiates
itself and provides a premium level of service due to its unmatched geographic
coverage, in-building penetration, guaranteed message delivery, and guaranteed
reliability.
The Company competes with a full array of companies, from small startups to
Fortune 500 companies. Many of these competitors have financial, technical and
marketing resources in excess of the Company's. Because the Company competes
in several market segments with a broad range of services, competing
technologies may address one or more of the market segments. The Company has
identified six major classes of technologies or services that offer
capabilities competitive with the Company's services: Terrestrial Packetized
Data; Cellular/PCS; Specialized Mobile Radio ("SMR")/Enhanced Specialized
Mobile Radio ("ESMR"); Private Systems; Paging/Narrowband PCS; and Mobile
Satellite Services.
Terrestrial Packetized Data. Companies using packetized data technologies
provide wireless data services that compete directly with a number of the
Company's data products. Packetized data technology relies on radio
frequencies to transmit short-burst data messages. Primary competitors using
this technology include RAM Mobile Data ("RAM"), Metricom, Teletrac and
Cellnet. RAM, a wholly-owned subsidiary of BellSouth enterprises, operates a
terrestrial-only network that provides data services to customers primarily in
the field service, transportation and utility industries. The Company believes
that its network provides broader coverage, and superior in-building
penetration compared to RAM's network. In addition, the Company is upgrading
its network in major cities so that it will operate at faster speeds than the
RAM network. Metricom's Ricochet service provides wireless, mobile access to
the Internet, private intranets, local area networks and e-mail. Metricom
currently offers its service in limited regions comprised of San Francisco,
Seattle, Houston and Washington, D.C. Teletrac provides primarily location and
vehicle monitoring and two-way data transfer services in major metropolitan
areas and Cellnet provides wireless meter reading services and has a contract,
similar to the Company's with Enron, to provide meter reading for residential
customers. The Company's contract with Enron is for commercial meter reading
that typically requires a large volume of data to be sent from each meter.
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Cellular and PCS. Cellular and PCS services compete with the Company's
satellite and terrestrial voice and data services, and presently serve the
majority of mobile communications users in the United States, with
approximately 55,000,000 units. Cellular and PCS systems operated by
approximately 1,500 companies collectively provide service throughout most of
the United States, with no single competitor providing the breadth of coverage
that is available through the Company's network. Cellular Digital Packet Data
("CDPD"), the cellular industry's standard packet data service, is available
principally in metropolitan areas containing approximately 44% of the nation's
population at the end of 1997. PCS carriers, many of which offer short message
capabilities and expect to offer larger capacity packet data services in the
near future, presently offer service which in the aggregate covers
approximately 60% of the U.S. population.
Most cellular and PCS providers have structured their services and
distribution principally to meet switched voice service requirements of broad-
market users. However, HighwayMaster Communications, Inc. offers data and
voice communications to the long-haul trucking industry through the
application of its proprietary messaging and billing technologies to circuit-
switched cellular capacity which it purchases in bulk from a number of large
cellular carriers. Differences in equipment and service pricing and product
characteristics result in minimal direct competition between the Company's
voice products and most other cellular carriers.
Specialized Mobile Radio (SMR) and Enhanced Specialized Mobile Radio (ESMR)
Services. Within the limitations of available spectrum and technology, SMR
operators compete with the Company's voice dispatch services by providing
mobile communications services, including mobile telephone, dispatch, paging
and limited data services. For certain applications, such as mobile telephone
interconnect, SMR systems presently are less expensive than the Company's
services, although the shared channel configuration and the economics of these
systems have traditionally caused SMR systems to be less frequently utilized
for voice telephone services.
SMR radio services have been expanding rapidly over the past ten years and
converting from analog to digital technology. ESMR systems compete with the
Company's voice and data dispatch services in metropolitan areas. NEXTEL
Communications, Inc. provides ESMR services in numerous large metropolitan
service areas in the United States and is the leading provider of SMR using
digital technology, frequency reuse and lower power transmitters to transform
its current SMR service into cellular-like services, including voice telephone
services. Geotek Communications, Inc. offers voice and data communication
networks for the trunked mobile radio market. Targeted primarily to small and
medium-sized businesses managing fleets of vehicles and mobile workforces,
Geotek is focused on providing metropolitan area voice and data services.
Currently, Geotek's service is available in 11 markets. Neither Nextel nor
Geotek provide nationwide voice dispatch or data services comparable to those
offered by the Company.
Private Land Mobile Frequencies. Individual companies that have chosen to
develop their own private wireless data network constitute a large percentage
of the wireless marketplace for corporate fleets. An example of such a
customer is Federal Express. While these companies already have made
significant investments in their systems, in some cases recurring maintenance,
upgrade and expansion costs, coupled with recent steps by the FCC to charge
private system owners for the use of the radio frequencies, have caused these
organizations to turn to commercial providers such as the Company.
Narrowband PCS/Enhanced Paging. There are a large number of paging companies
that offer messaging services on a regional or nationwide basis. Despite the
low cost of one-way paging, most traditional paging services do not provide
full-function two-way communications. Although some paging companies, such as
MTel, have begun to offer limited time-delayed two-way messaging services,
initial challenges in coverage, responsiveness and throughput currently limit
their adoption by the Company's targeted business customers.
Mobile Satellite Services. The Company's voice and data services face
competition from a number of companies that are selling or are developing
services using a variety of satellite technologies. The principal alternative
satellite-based communications system available to the trucking market is
Qualcomm Incorporated's ("Qualcomm") OmniTracs nationwide data service.
Qualcomm currently provides low-speed mobile data services using terminals
which are priced competitively with the Company's satellite-only terminals.
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Qualcomm's OmniTracs service does not provide a terrestrial communications
path or least-cost routing capabilities similar to the Company's multi-mode
product. As a result, transmissions to and from a vehicle must be routed
exclusively over a satellite network and are subject to line of sight blocking
and higher transmission costs, limiting the product's functionality and cost-
effectiveness in segments that require urban coverage or large volumes of data
transmission.
NORCOM Networks Inc. ("NORCOM") is in the process of commercially deploying
a satellite-based packet data service that competes with the Company's data
services in the transportation and field service segments. NORCOM currently
purchases channel capacity on the Company's satellite over which it operates
its network, and combines its satellite data service product with terrestrial
services provided by RAM Mobile Data and by the Company.
The Company's satellite services also compete for mobile maritime
subscribers with TMI, a Canadian company operating a satellite comparable to
MSAT-2, and with Inmarsat, a consortium of 70 countries that is authorized to
provide maritime voice and data services along the North American coasts.
Because Inmarsat's current system operates at a much lower power level than
does the Company's satellite, its mobile terminals must be equipped with
antenna systems that are larger and more expensive than those required for the
Company's network. The Inmarsat system also has per minute charges
significantly higher than those charged by the Company. COMSAT, the U.S.
signatory for Inmarsat, applied to the FCC for authority to provide mobile
satellite services ("MSS") in the United States through Inmarsat facilities.
The FCC has consistently denied COMSAT's application, most recently on January
9, 1998. TMI, which is technically capable of providing service within the
United States, has also announced its intention to provide MSS to domestic
customers over MSAT-1. Both TMI and SatCom Systems, Inc., a United States
reseller, have applied to the FCC for authority to provide MSS in the United
States using TMI space segment on MSAT-1. There can be no assurances that
COMSAT, TMI, or any other satellite provider will not become authorized to
provide MSS in the United States (See "Regulation").
Recently, several Low Earth Orbit ("LEO") and Medium Earth Orbit ("MEO")
satellite systems have been announced or have commenced deployment. Examples
of these systems, which are more complex and costly than the Company's
geosynchronous network, include Iridium LLC; Globalstar Telecommunications,
LTD, and ICO Global. When deployed, these systems will offer certain
advantages over the Company's voice telephony service, including the ability
to support small handheld telephones and, in certain instances, reduced
transmission delay. However, the Company does not expect that these systems
will provide a nationwide dispatch service or support data service in excess
of 2,400 bps. Moreover, these companies are focused primarily on consumer-
oriented and global traveler applications and not the business markets which
are the focus of the Company. Further, because these companies will deploy
satellite systems, they are not expected to compete against urban in-building
data services provided by the Company.
In addition to relatively complex LEO systems designed to provide mobile
voice services, there are a number of proposals for relatively simple "little"
LEO systems that would provide only low-speed packet data services. These
systems, including ORBCOMM Global, L.P., Final Analysis and LEO One USA, have
access to comparatively limited spectrum and are expected to compete for
customers who require specialty applications such as asset tracking services
for unpowered trailers.
AMRC
The Company is one of two primary operating subsidiaries of Holdings. The
second subsidiary, AMRC has been granted a license from the FCC to construct,
launch and operate a domestic satellite system for the provision of satellite-
based DARs. AMRC made a payment of $90 million to fully pay for its DARS
license in October 1997. Holdings currently owns 80% of the capital stock of
AMRC. The remainder of AMRC is owned by WorldSpace, a leading international
DARS company that is planning to provide DARS service to Latin America, Africa
and Asia. Through its investment in AMRC, WorldSpace has an option to increase
its ownership in AMRC to 72%, subject to FCC approval. It is anticipated that
the proceeds resulting from the exercise of the option will not be available
to either Holdings or the Company.
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EMPLOYEES
At December 31, 1997, the Company employed approximately 477 individuals, of
which 117 were sales and marketing, 279 were network and operations, and 81
were general and administrative employees. None of the Company's employees is
represented by a labor union, and the Company considers its relations with its
employees to be good.
PROPERTIES
The Company leases approximately 94,000 square feet at its headquarters
office space and network operations center in Reston, Virginia. The lease has
a term which runs through August 3, 2003 (which may be extended at the
Company's election for an additional five years). In addition, the Company
leases a back-up Ku-band radio frequency facility in Alexandria, Virginia. The
Company also leases approximately 86,000 square feet of space for an
operations center in Lincolnshire, Illinois, the lease for which expires
December 31, 2000, and approximately 7,800 square feet for a remote data
center in Lexington, Kentucky, the lease for which expires April 30, 2001. The
Company also leases site space for approximately 1,700 base stations across
the country under one- to five-year lease contracts with renewal provisions.
The Company anticipates that it will be able to gain access to additional base
station sites when necessary on acceptable terms.
LEGAL PROCEEDINGS
In 1992, a former director of Holdings filed an Amended Complaint against
Holdings alleging violations of the Communications Act and of the Sherman Act
and breach of contract. The suit seeks damages for not less than $100 million
trebled under the antitrust laws plus punitive damages, interest, attorneys'
fees and costs. In mid-1992, Holdings filed its response denying all
allegations. Holdings' motion for summary judgment, filed on June 30, 1994,
was denied on April 18, 1996. The trial in this matter, previously set for
December 1997, has been postponed to a date to be determined in 1998.
Management believes that the complaint is without merit, and the ultimate
outcome of this matter will not be material to the Company's financial
position, results of operations, or its cash flow.
REGULATION
The Company is regulated to varying degrees at the federal, state, and local
levels. Various legislative and regulatory proposals under consideration from
time to time by Congress and the FCC have in the past materially affected and
may in the future materially affect the telecommunications industry in
general, and American Mobile and ARDIS in particular. In addition, many
aspects of regulation at the federal, state and local level currently are
subject to judicial review or are the subject of administrative or legislative
proposals to modify, repeal, or adopt new laws and administrative regulations
and policies. The following is a summary of significant laws, regulations and
policies affecting the operation of American Mobile's and ARDIS' businesses.
GENERAL
The ownership and operation of American Mobile's (MSS) system and ARDIS'
ground-based two-way wireless data system are subject to the rules and
regulations of the FCC, which acts under authority granted by the
Communications Act and related federal laws. Among other things, the FCC
allocates portions of the radio frequency spectrum to certain services and
grants licenses to and regulates individual entities using that spectrum.
American Mobile and ARDIS operate pursuant to various licenses granted by the
FCC.
Both American Mobile and ARDIS are Commercial Mobile Radio Service ("CMRS")
providers and therefore are regulated as common carriers. The companies must
offer service at just and reasonable rates on a first-come, first-serve basis,
without any unjust or unreasonable discrimination, and they are subject to the
FCC's complaint processes. The FCC has forborne from applying numerous common
carrier provisions of the Communications Act to CMRS providers. In particular,
American Mobile and ARDIS are not subject to
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traditional public utility rate-of-return regulation, and the companies are
not required to file tariffs with the FCC for their domestic services.
As providers of interstate telecommunications services, American Mobile and
ARDIS are required to contribute to the FCC's universal service fund, which
supports the provision of telecommunications services to high-cost areas, and
establishes funding mechanisms to support the provision of service to schools,
libraries, and rural health care providers. Under the FCC's current rules,
American Mobile and ARDIS are required to contribute a percentage of their
end-user telecommunications revenues resulting from the sale of
telecommunications services. The extent of this obligation is subject to
change. A number of parties have filed petitions for review of the FCC's
universal service policy and these appeals have been consolidated in the U.S.
Court of Appeals for the Fifth Circuit. Both companies may also be required to
contribute to state universal service programs. The requirement to make these
payments, the amount of which in some cases may be subject to change and is
not yet determined, may have a material adverse impact on the conduct of their
businesses.
American Mobile and ARDIS are subject to the Communications Assistance for
Law Enforcement Act ("CALEA"). Under CALEA, American Mobile and ARDIS must
ensure that law enforcement agencies can intercept certain communications
transmitted over their networks. American Mobile and ARDIS must also ensure
that law enforcement agencies are able to access certain call-identifying
information relating to communications over their networks. The companies must
comply with the CALEA requirements and any rules subsequently promulgated by
October 25, 1998 or face possible sanctions, including substantial fines and
possible imprisonment of company officials. The FCC currently has a proceeding
underway to establish rules for the implementation of these requirements. This
proceeding primarily addresses record-keeping and security-related issues. The
telecommunications industry, which has been charged with establishing detailed
technical standards for compliance with CALEA's requirements, has not yet been
able to adopt final standards that are acceptable to law enforcement. While
both Congress and the FCC have the authority to extend the compliance
deadline, both have thus far declined to do so. It is not clear whether the
companies will be able to comply with CALEA's requirements or will be able to
do so in a timely manner. CALEA establishes a federal fund to compensate
telecommunications carriers for all reasonable costs directly associated with
modifications performed by carriers in connection with equipment, facilities,
and services installed or deployed on or before January 1, 1995. For
equipment, facilities, and services deployed after January 1, 1995, the CALEA
fund is supposed to compensate carriers for any reasonable costs associated
with modifications required to make compliance "reasonably achievable." It is
possible that all necessary modifications will not qualify for this
compensation and that the available funds will not be sufficient to reimburse
the companies. The requirement to comply with CALEA could have a material
adverse effect on the conduct of their businesses.
As a matter of general regulation by the FCC, both of the companies are
subject to, among other things, payment of regulatory fees, restrictions on
the level of radio frequency emissions of their systems' mobile terminals and
base stations, and "rate integration" regulations requiring that providers of
interstate interexchange telecommunications services charge the same rates for
these services in every state, including Puerto Rico and the U.S. Virgin
Islands. Any of these regulations may have an adverse impact on the conduct of
their businesses.
The FCC licenses of American Mobile and ARDIS are subject to restrictions in
the Communications Act that (i) certain FCC licenses may not be held by a
corporation of which more than 20% of its capital stock is directly owned of
record or voted by non-U.S. citizens or entities or their representatives and
(ii) that no such FCC license may be held by a corporation controlled by
another corporation ("indirect ownership") if more than 25% of the controlling
corporation's capital stock is owned of record or voted by non-U.S. citizens
or entities or their representatives, if the FCC finds that the public
interest is served by the refusal or revocation of such license. However, with
the implementation of the Basic Telecommunications Agreement ("BTA"),
negotiated under the auspices of the World Trade Organization ("WTO") and to
which the United States is a party, the FCC will presume that indirect
ownership interests in excess of 25% by non-U.S. citizens or entities will be
permissible to the extent that the ownership interests are from WTO-member
countries. The BTA took effect on February 5, 1998, and the FCC's implementing
regulations took effect on February 9, 1998.
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MSS SYSTEM
American Mobile is licensed by the FCC to provide a broad range of mobile
voice, data and dispatch services via satellite to land, air and sea-based
customers in a service area consisting of the continental United States,
Alaska, Hawaii, Puerto Rico, the U.S. Virgin Islands and U.S. coastal waters
and airspace. American Mobile is also authorized to provide fixed site voice
and data services via satellite to locations within this service area, so long
as such services remain incidental to American Mobile's mobile communications
services. American Mobile is authorized to build, launch and operate three
geosynchronous satellites in accordance with a specified schedule. American
Mobile is not in compliance with the schedule for commencement and
construction of its second and third satellites and has petitioned the FCC for
changes to the schedule. Certain of these extension requests have been opposed
by third parties. The FCC has not acted on American Mobile's requests. The FCC
has the authority to revoke the authorizations for the second and third
satellites and, in connection with such a revocation, could exercise its
authority to rescind American Mobile's license. American Mobile believes that
the exercise of such authority to rescind the license is unlikely. The term of
the license for each of American Mobile's three authorized satellites is ten
years, beginning when American Mobile certifies that the respective satellite
is operating in compliance with American Mobile's license. The ten-year term
of MSAT-2 began August 21, 1995. Although American Mobile anticipates that the
authorizations are likely to be extended in due course to correspond to the
useful lives of the satellites and that new licenses will be granted for
replacement satellites, there is no assurance of such extension or grant.
Holdings' current foreign ownership level, for which the indirect ownership
limits are applicable, is approximately 21%. Singapore, which is the domicile
of Singapore Telecom, one of Holdings' largest shareholders, is a WTO-member
country.
On March 12, 1998, the FCC granted American Mobile's application requesting
the modification of its license to permit the Company to implement the
Satellite Purchase Agreement and Satellite Lease Agreement. This proceeding
was contested, and the opponents to this application may seek review of this
grant. In addition, this grant is conditioned upon and subject to modification
as necessary to comply with any subsequent agreement between representatives
of the governments of Canada and the United States concerning shared use of
MSAT-1.
MSAT-2, like MSAT-1, is designed to be able to operate over the 1530-
1559/1631.5-1660.5 MHz bands (the "L-band"). American Mobile is currently
licensed to operate in the 1544-1559/1645-1660.5 MHz bands (the "upper L-
band"). The FCC has designated American Mobile as the licensee for both MSS
and Aeronautical Mobile Satellite (Route) Service ("AMS(R)S"). AMS(R)S
includes satellite communications related to air traffic control, as well as
aeronautical safety-related operational and administrative functions. As a
condition to its authorization, American Mobile is required by the FCC to be
capable of providing priority and preemptive access for AMS(R)S traffic in the
upper L-band and to be interoperable with and capable of transferring AMS(R)S
traffic to international and foreign systems providing such service. American
Mobile currently anticipates it will be able to meet these requirements
without any material adverse effect on its business. If American Mobile is
unable to meet these requirements, the FCC may authorize and give priority
spectrum access to one or more additional satellite systems that meet the
specified requirements.
American Mobile has applied for authorization to operate in the additional
1530-1544/1631.5-1645.5 MHz bands (the "lower L-band"). If American Mobile is
assigned spectrum in the lower L-band, it will be required by the FCC to
provide similar priority and preemptive access in that spectrum to maritime
distress and safety communications. With respect to its mobile voice
terminals, American Mobile currently anticipates it will be able to meet this
requirement without any material adverse effect on its business. The Federal
Aviation Administration ("FAA") filed comments, however, in connection with
American Mobile's application to operate up to 30,000 mobile data terminals
that were transitioned from leased space segment to MSAT-2 in late 1995,
stating its concern that the mobile data terminals cannot be operated in
compliance with American Mobile's obligation to provide priority and
preemptive access in the upper L-band. The FAA has proposed that American
Mobile operate the mobile data terminals in the lower L-band. American Mobile
has received successive six-month grants of special temporary authority
("STA"), under a two-year waiver of the FCC's rules on priority and preemptive
access, to operate up to 15,100 mobile data terminals in the lower L-band.
This number was
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increased to 33,100 terminals pursuant to American Mobile's acquisition of the
mobile data equipment and services previously licensed to Rockwell. The two-
year waiver expired on August 1, 1997, but remains in effect while American
Mobile's request for a two-year extension of that waiver is pending at the
FCC. American Mobile will need additional authority to increase the number of
mobile data terminals that it is authorized to operate if it is to fulfill
contracts with GE Logisticom and others. American Mobile will also need
permission from the FCC to operate mobile data terminals with a different
transmission design than those operated under its current lower L-band
authorization. Transmissions from these terminals require a wider band width
than do transmissions from American Mobile's existing terminals. There can be
no assurance that American Mobile will continue to receive authority to
operate these new mobile data terminals or any other additional mobile data
terminals in the lower L-band.
American Mobile's mobile terminal authorizations are subject to compliance
with certain requirements regarding interference protection to the Global
Positioning System ("GPS"). With the consent of the FAA, the FCC granted
American Mobile's application subject to certain conditions, including that
the grant may be modified after the interference issue is studied. The FCC is
now considering a proposal from the National Telecommunications and
Information Administration to impose more stringent limits on the out-of-band
emissions from certain mobile terminals, including those used in connection
with American Mobile's system, in order to protect GPS and the Russian Global
Navigation Satellite System ("Glonass"). This proposal would require that
mobile terminals used on American Mobile's system be manufactured according to
a new design by 2002, and that existing terminals and any terminals not
meeting the new specifications be retired or retrofitted by 2005. American
Mobile has opposed this proposal. If adopted by the FCC, this policy could
have a material adverse effect on American Mobile's business.
American Mobile's license authorizes MSAT-2 to operate using certain
telemetry, transfer and control frequencies in the Ku-band, and, under the
Satellite Purchase Agreement, American Mobile would operate MSAT-1 using
similar frequencies. American Mobile operates MSAT-2 at the 101(degrees) W.L.
orbital location, and, under the Satellite Purchase Agreement, would also
operate MSAT-1 at 101(degrees) W.L. GE American Communications, Inc. ("GE
American"), also operates a satellite at the 101(degrees) W.L. orbital
location. American Mobile and GE American have an agreement covering both
MSAT-1 and MSAT-2 that may require American Mobile to modify its operations or
make certain payments to GE American if American Mobile's operations cause
interference to those of GE American. While there can be no assurances, the
Company does not anticipate any interference in the operations of either MSAT-
1 or MSAT-2 and those of GE American.
American Mobile's subscriber equipment will operate in L-band frequencies
that are limited in available bandwidth. The feeder-link earth stations and
the network communications controller of the CGS operate in the more plentiful
fixed satellite service Ku-band frequencies. Of the 30 MHz in the upper L-band
frequencies, American Mobile is currently licensed to operate in the 1544-
1559/1645.5-1660.5 MHz bands. Of the 30 MHz assigned to American Mobile by the
FCC, one MHz is limited to AMS(R)S and one-way paging and two MHz are limited
to distress and safety communications. American Mobile does not plan to
operate on these three MHz of bandwidth.
In June 1996, the FCC issued a notice of proposed rulemaking proposing to
assign to American Mobile the first 28 MHz of internationally coordinated L-
band spectrum from either the upper or lower portion of the MSS L-band. Under
the FCC's proposal, American Mobile would have first priority access to use
the lower L-band spectrum as necessary to compensate for spectrum unavailable
for coordination in the upper L-band. In the event the United States is able
to coordinate more than 28 MHz of L-band spectrum, the FCC has proposed
allowing other applicants to apply for assignment of those frequencies.
Certain entities have filed with the FCC petitions to deny American Mobile's
application and comments opposing the assignment of additional frequencies to
American Mobile. While there can be no assurances, American Mobile believes
the FCC is likely to grant American Mobile's application.
In the Ku-band frequencies, American Mobile is currently licensed to operate
MSAT-2 using 200 MHz within the bands 10.75-10.95 GHz for downlink
transmissions and 13.0-13.15 GHz and 13.2-13.25 GHz for
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uplink transmissions. American Mobile has applied for authority to operate
using an additional 200 MHz of spectrum within the same bands.
Spectrum availability, particularly in the L-band, is a function not only of
how much spectrum is assigned to American Mobile by the FCC, but also the
extent to which the same frequencies are used by other systems in the North
American region, and the manner of such use. All spectrum use must be
coordinated with other parties that are providing or plan to provide mobile
satellite-based communications in the same geographical region using the same
spectrum. At this time, the other parties with which spectrum use must be
coordinated include Canada, Mexico, the Russian Federation and Inmarsat.
Use of the spectrum is determined through a series of negotiations between
the United States government and the other user agencies, pursuant to the
rules and regulations of the International Telecommunication Union ("ITU").
For the past several years, each of the countries and international
organizations that have used or will use L-band frequencies within the North
American region have been meeting regularly to negotiate and coordinate their
current and future use of that spectrum. American Mobile estimates that
international coordination will make approximately 20 MHz of L-band spectrum
available to the United States for MSAT-2. Since the coordination process
involves many parties and there is uncertainty about the total outcome, the
actual amount of spectrum available may be more or less than that estimated.
In addition, the proposed Satellite Sharing Agreement may make the
coordination of spectrum for American Mobile's system more difficult. Some of
the spectrum that may be available to American Mobile may include a portion of
the 28 MHz lower L-band spectrum adjacent to the frequencies already assigned
to American Mobile by the FCC.
The ITU's Radio Regulations include a table of frequency allocations that
prescribe the permitted uses of the radio spectrum. As a result of the ITU
satellite plan for parts of the Ku-band, there also may be restrictions on
American Mobile's ability to deploy feederlink earth stations in Alaska,
Hawaii, Puerto Rico, and the U.S. Virgin Islands.
During the course of the licensing process for American Mobile and several
times since, the FCC has stated that there is only enough spectrum in the MSS
L-band for the FCC to authorize a single MSS system to provide service in the
United States. In 1995, however, Comsat applied for authority to provide MSS
in the United States in the L-band over the Inmarsat satellite system. Comsat
subsequently filed an application seeking a blanket authorization for the
operation of 5,000 mobile terminals in the United States, as well as a request
for an STA to operate 50 mobile terminals in the United States. On January 9,
1998, the FCC denied Comsat's request for an STA and required that Comsat
amend its underlying applications to conform with the requirements established
in the FCC's November 1997 order on market access by foreign-licensed
satellite systems. This order conforms the FCC's regulations with the BTA and
makes it easier for foreign satellite systems from WTO-member countries to
access the United States market, while at the same time making clear that the
FCC may deny access to such satellite applicants on the basis of spectrum
availability, applicants' technical, legal, or financial qualifications, or
foreign or domestic policy factors. The order also requires Comsat to make an
appropriate waiver of immunity from any suit as part of any application to
provide domestic services over Inmarsat's system. On January 12, 1998, Comsat
filed an appeal of this order with the U.S. Court of Appeals for the D.C.
Circuit, and American Mobile is opposing this appeal as an intervenor. On
February 6, 1998, Comsat filed an application for review of the FCC's denial
of its request for an STA, and a petition for waiver of the FCC's new market
access rules to permit it to offer MSS on a temporary basis in the United
States. American Mobile has opposed these filings.
In its January 9, 1998 denial of Comsat's STA request, the FCC stated that
it would be willing to authorize Comsat to provide international service if
Comsat amended its blanket license application to show that service through
its terminals and Inmarsat's MSS system could be limited to international
traffic. Comsat has amended its application in order to make this showing.
American Mobile has opposed this application. In addition, Comsat has applied
for authority under Section 214 of the Communications Act to provide satellite
paging and tracking services in the United States. American Mobile has also
opposed this application.
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TMI, which is technically capable of providing service within the United
States, has also announced its intention to provide MSS to domestic customers
over MSAT-1. On February 10, 1998, the FCC granted a thirty-day STA to SatCom
Systems, Inc. ("SatCom") for the testing of up to 30 full-duplex mobile
terminals in the United States using TMI's system. On March 10, 1998, SatCom
filed a request for an additional STA of 90 days for further testing, and also
requested that the scope of this STA be expanded to permit it to operate up to
500 mobile terminals for 180 days on a private carrier basis so that it may
conduct U.S. marketing trials. SatCom simultaneously filed an application for
a blanket license to operate up to 25,000 mobile terminals in the United
States over MSAT-1 on a permanent basis. American Mobile has opposed this
blanket license application. On March 30, 1998, TMI filed an application for a
blanket license to operate up to 100,000 mobile terminals in the United States
over TMI's space segment in MSAT-1 on a permanent basis. American Mobile will
oppose TMI's blanket license application.
On January 30, 1998, Kitcomm Satellite Communications Ltd. ("Kitcomm") filed
a letter of intent with the FCC to provide MSS to U.S. customers over its
proposed foreign-licensed satellite system. Kitcomm proposes to provide two-
way remote data collection, tracking and messaging services over a global
system of non-geostationary satellites. Kitcomm has stated its intent to
operate a low-power, spread-spectrum system in the lower L-band at 1525-
1530/1626.5-1631 MHz. In order to provide domestic service, Kitcomm will also
have to request authority to operate mobile terminals in the United States.
American Mobile will oppose any FCC application by Kitcomm that would reduce
the spectrum available to American Mobile either directly or as a result of
international frequency coordination.
In addition to providing additional competition to American Mobile, a grant
of domestic authority by the FCC to one of these foreign systems would
significantly increase the demand for spectrum in the international
coordination process and could adversely affect American Mobile's business.
American Mobile is operating under waivers of certain FCC rules. In 1996,
the FCC issued an order requiring all CMRS providers to offer what are known
as "enhanced 9-1-1 services" including the ability to automatically locate the
position of all transmitting mobile terminals. American Mobile would not have
been able to offer this automatic location information without adding
substantially to the cost of its mobile equipment and reconfiguring its CGS
software. The FCC decided not to impose specific new requirements on MSS
providers, including American Mobile, at that time. The FCC did state its
expectation that such providers eventually would be required to provide
"appropriate access to emergency services." A decision to impose this
requirement on MSS providers would have a material adverse effect on American
Mobile.
The FCC enacted "rate integration" regulations requiring that providers of
interstate interexchange telecommunications services charge the same rates for
these services in every state, including Puerto Rico and the U.S. Virgin
Islands. American Mobile has opposed the imposition of this rate integration
requirement on its MSS system, so that it may preserve the flexibility to
charge more for service in areas covered by satellite beams that require more
satellite power. The FCC has denied American Mobile's request for a permanent
exemption from its rate integration requirement, but has not yet ruled on
American Mobile's request for a temporary waiver of a year or more. The FCC
has granted American Mobile an interim waiver from its rate integration
requirement until its decision on American Mobile's temporary waiver request.
GROUND-BASED SYSTEM
ARDIS' wireless data network consists of base stations licensed in the
Business Radio and Specialized Mobile Radio Service, all operating in the 800
MHz frequency band. The ARDIS system is interconnected with the public
switched network.
The FCC's licensing regime in effect when it issued ARDIS' licenses provided
for the issuance of individual licenses for specific channels at specific
sites. With respect to the part of the band in which all of ARDIS' base
stations operate, however, the FCC has implemented a new licensing regime. The
new licensing regime involves the auctioning of licenses for specific channels
for wide geographic areas, within which the licensee will have
70
<PAGE>
substantial flexibility to operate any number of base stations, including base
stations that may operate on the same channels as incumbent licensees such as
ARDIS. The FCC has proposed to conduct the auctions for additional channel
capacity of the kind used by ARDIS beginning in the third quarter of 1998. The
FCC proposes to prohibit the new geographic licensees from causing
interference to incumbents, but there is concern that such interference may
occur and that practical application of these rules is uncertain.
ARDIS believes that it has licenses for sufficient channels to meet its
current needs for capacity. To the extent that it needs additional capacity,
it may be required to either participate in the upcoming auctions or acquire
channels from other licensees. As part of its new licensing regime, the FCC
permits a wide-area geographic licensee, with prior FCC approval, to sell a
portion of its geographic area to another entity. This partitioning authority
may increase ARDIS' flexibility to operate additional base stations, but the
practical utility of this option is uncertain at this time.
ARDIS operates its system under a number of waivers of the FCC's technical
rules, including rules on station identification, for-profit use of excess
capacity, system loading, and multiple station ownership. Several of these
waivers were first obtained individually by IBM and Motorola, which operated
separate wireless data systems until forming the ARDIS joint venture in 1990.
The FCC incorporated a number of these waivers into its regulations when it
implemented Congress' statutory provision creating the CMRS classification,
and ARDIS no longer requires those waivers. On June 5, 1996, the FCC waived
its one-year construction requirement and granted ARDIS extensions of time to
complete the buildouts of approximately 190 sites, as required to maintain
previously granted licenses. As of March 25, 1998, ARDIS intends but has yet
to construct 104 of these sites. The extended construction deadlines vary by
site between June 27, 1998 and March 31, 1999. Failure to complete the
buildouts in a timely manner could result in a loss of licenses for such sites
from the FCC. In addition, at 11 of 104 uncompleted sites ARDIS is required to
erect a new tower, and there is no assurance that local zoning regulations
will not affect the timetable for the completion of these sites.
The foregoing does not purport to describe all present and proposed federal,
state, and local regulation and legislation relating to the industries in
which American Mobile and ARDIS operate. Other existing federal, state, and
local regulations currently are the subject of a variety of judicial
proceedings, legislative hearings, and administrative and legislative proposal
which could change, in varying degrees, the manner in which American Mobile
and ARDIS operate. Neither the outcome of these proceedings nor their impact
on American Mobile's and ARDIS' operations can be predicted at this time.
71
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information regarding the directors
and executive officers of Holdings as of March 31, 1998.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Gary M. Parsons......... 48 Chairman of the Board of Directors and Chief Executive Officer
Walter V. Purnell, Jr... 53 President
Robert L. Goldsmith..... 54 Executive Vice President and Chief Operating Officer
Randy S. Segal.......... 42 Vice President, General Counsel and Secretary
Stephen D. Peck......... 53 Vice President, Chief Financial Officer
Jack A. Shaw............ 59 Director
Douglas I. Brandon...... 39 Director
Steven D. Dorfman....... 62 Director
Ho Siaw Hong............ 48 Director
Billy J. Parrott........ 63 Director
Andrew A. Quartner...... 44 Director
Roderick M. Sherwood,
III.................... 44 Director
Michael T. Smith........ 54 Director
Yap Chee Keong.......... 37 Director
Albert L. Zesiger....... 69 Director
</TABLE>
Set forth below are descriptions of the backgrounds and principal
occupations of each of Holdings' executive officers and directors.
EXECUTIVE OFFICERS
Gary M. Parsons, 48. Holdings' Chairman of the Board of Directors and Chief
Executive Officer effective upon the consummation of the Acquisition, Mr.
Parsons has been a Holdings director, the Chief Executive Officer and
President of Holdings since July 1996. Mr. Parsons joined Holdings from MCI
Communications Corporation ("MCI") where he served in a variety of executive
roles from 1990 to 1996, including most recently as Executive Vice President
of MCI Communications, and as Chief Executive Officer of MCI's subsidiary
MCImetro, Inc. From 1984 to 1990, Mr. Parsons was one of the principals of
Telecom*USA, which was acquired by MCI.
Walter V. Purnell, Jr., 53. Holdings' President effective upon the
consummation of the Acquisition. Prior to the Acquisition, Mr. Purnell was
President and Chief Executive Officer of ARDIS since September 1995.
Previously, Mr. Purnell had served as the chief financial officer of ARDIS
since its founding in 1990. Prior to 1990, Mr. Purnell held a broad range of
senior executive positions with IBM over 23 years, with financial
responsibility over significant telecommunications and other business
divisions, both domestically and internationally.
Robert L. Goldsmith, 54. Holdings' Executive Vice President and Chief
Operating Officer since February 1997. Prior to joining Holdings, Mr.
Goldsmith was the Senior Vice President of Sales and Marketing and General
Manager of the Commercial Services Division for Qwest Communications Company.
Prior to joining Qwest in 1995, Mr. Goldsmith was with MCI for nine years in
various executive sales and marketing positions.
72
<PAGE>
Randy S. Segal, 42. Holdings' Vice President, General Counsel and Secretary
since October 1992. From October 1983 to October 1992, Ms. Segal was
associated with the law firm of Debevoise & Plimpton in New York, New York.
Prior to joining Debevoise, Ms. Segal clerked for the Honorable Jerre S.
Williams of the United States Court of Appeals for the Fifth Circuit, and for
the Honorable Edmund L. Palmieri for the United States District Court for the
Southern District of New York.
Stephen D. Peck, 53. Holdings' Vice President and Chief Financial Officer
since July 1997, Mr. Peck was formerly Executive Vice President and Chief
Financial Officer at Phillips Publishing International ("PPI"), which he
joined in 1986. Prior to joining PPI, Mr. Peck was Senior Vice President for
Finance and Administration of the Viguerie Company, which he joined in 1977.
DIRECTORS
Gary M. Parsons, a Holdings director and Chairman of the Board of Directors,
has been a Holdings director since July 1996. See "Executive Officers."
Douglas I. Brandon, 39. A Holdings director as of January 1998, Mr. Brandon
is Vice President--External Affairs & Law, AT&T Wireless Services, Inc. Prior
to joining AT&T Wireless in 1993, Mr. Brandon was associated with the law firm
of Davis Polk & Wardwell beginning in 1986. Prior to Davis Polk, Mr. Brandon
clerked for the Honorable William H. Timbers of the United States Court of
Appeals for the Second Circuit.
Steven D. Dorfman, 62. A Holdings director since April 1996, Mr. Dorfman is
Vice Chairman of Hughes Electronics Corporation, Chairman of Hughes
Telecommunications and Space Company, and Chairman of Hughes Space and
Communications Company. Mr. Dorfman is a member of the Hughes Electronics
Executive Committee. Previously, Mr. Dorfman served as President of Hughes
Space and Communications Company, and President and Chief Executive Officer of
Hughes Communications, Inc. Mr. Dorfman has been with Hughes since 1957.
Ho Siaw Hong, 48. A Holdings director since April 1997 and from March 1993
to March 1994, Mr. Ho is Assistant Vice President of the Satellite Services
Group of Singapore Telecom. Since 1972 he has held a variety of positions at
Singapore Telecom in the areas of network control and management, cellular
radio, paging and satellite system planning and satellite business
development.
Billy J. Parrott, 63. A Holdings director since May 1988, Mr. Parrott is
President and Chief Executive Officer of Antifire, Inc., a manufacturer of
non-toxic fire retardants. Mr. Parrott is also the founder and co-founder of
several telecommunications companies, including Private Networks, Inc., a
builder and operator of telecommunications and broadcast properties, and
Roanoke Valley Cellular Telephone Company, a cellular communications company.
Mr. Parrott is owner of a production company where he functions as a writer,
producer, director and marketing consultant to Fortune 500 companies.
Andrew A. Quartner, 44. A Holdings director since May 1988, Mr. Quartner
also serves as corporate counsel of Nextlink Communications, Inc. and Vice
Chairman of CellPort Labs, Inc. Prior to his present positions, Mr. Quartner
was Senior Vice President, Law, of AT&T Wireless beginning in 1997, which he
joined in November 1985. Prior to joining AT&T Wireless, Mr. Quartner was
associated with the law firm of Debevoise & Plimpton in New York.
Jack A. Shaw, 59. A Holdings director since July 1996, and formerly Chairman
of the Board of Directors of Holdings, Mr. Shaw is Chairman and Chief
Executive Officer of Hughes Network Systems, Inc. and Senior Vice President of
Hughes Electronics Corporation. Mr. Shaw is a member of the Hughes Electronics
Corporation Executive Committee. Previously, Mr. Shaw held senior management
positions with companies including ITT Space Communications, Inc., Digital
Communications Corporation, and M/A-COM Telecommunications, Inc., which was
acquired by Hughes in 1987.
73
<PAGE>
Roderick M. Sherwood, III, 44. A Holdings director since April 1996, Mr.
Sherwood is a Vice President of Hughes Electronics Corporation and Executive
Vice President of DIRECTV International, Inc. Previously, Mr. Sherwood served
as Treasurer of Hughes Electronics Corporation, Senior Vice President--
Operations and Chief Financial Officer of Hughes Telecommunications and Space
Company, Chairman of Hughes Investment Management Company, and a member of the
Hughes Chairman's Forum. Prior to joining Hughes in May 1995, Mr. Sherwood
served in a variety of financial roles during his 14-year career with Chrysler
Corporation, where he served as assistant treasurer from 1991 to 1994.
Michael T. Smith, 54. A Holdings director since April 1996, Mr. Smith is
Chairman and Chief Executive of Hughes Electronics Corporation. Mr. Smith is a
member of the Hughes Electronics Corporation Executive Committee. Prior to his
current position, Mr. Smith served as Chairman of Hughes Aircraft Company and
Vice Chairman of Hughes Electronics Corporation. Mr. Smith served as Executive
Vice President and Chief Financial Officer of Hughes from 1989 until 1992. Mr.
Smith was the Chairman of Hughes Missile Systems Co. from 1992 to 1994.
Previously, Mr. Smith served in a variety of financial management positions
with Hughes and General Motors Corporation, beginning his career in 1968.
Yap Chee Keong, 37. A Holdings director since May 1997, Mr. Yap is the Group
Financial Controller/Vice President for the Corporate Finance Group of
Singapore Telecom with overall responsibility for the financial management and
control of the Singapore Telecom Group. Prior to joining Singapore Telecom in
1995, he was the General Manager and Group Financial Controller of United Pulp
& Paper Company Limited, and an Audit Manager of KPMG Peat Marwick LLP.
Albert L. Zesiger, 69. A Holdings director since May 1989, Mr. Zesiger is
Principal of the Zesiger Capital Group, LLC, an investment advisory firm.
Prior to forming Zesiger Capital, Mr. Zesiger was Managing Director of BEA
Associates ("BEA"), an investment advisory firm. He began his career with the
General Tire and Rubber Company, where he was Investment Funds Manager and
Chairman of the Real Estate Committee. Later, he was involved in mutual fund
management with both the Commonwealth Group and the Anchor Group of Mutual
Funds. Prior to joining BEA, he was Manager of Investment Advisory Services
and a member of the Investment Committee at Lazard Freres & Co.
74
<PAGE>
MANAGEMENT COMPENSATION
EXECUTIVE COMPENSATION
The following tables set forth (a) the compensation paid or accrued by the
Company to the Company's chief executive officer and its three other most
highly compensated executive officers receiving over $100,000 per year on an
annual basis (the "Executive Officers") for services rendered during the
fiscal years ended December 31, 1997, 1996 and 1995, and (b) certain
information relating to options granted to such individuals.
Summary Compensation Table
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------- ------------ ALL OTHER
NAME AND ANNUAL OTHER OPTIONS/ COMPEN-
PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION(2) SARS(3) SATION(4)
------------------ ---- --------- -------- --------------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Gary M. Parsons.......... 1997 $317,692 $158,000 $ 9,600 100,000 $ --
Chief Executive Officer 1996 145,385 87,500 4,026 300,000 --
Robert L. Goldsmith(5)... 1997 189,807 76,406 8,800 100,000 --
Executive Vice
President,
Chief Operating Officer
Randy S. Segal........... 1997 191,000 66,850 9,600 25,000 --
Vice President, General 1996 191,000 52,716 5,619 65,000 --
Counsel and Secretary 1995 183,750 55,000 40,341 12,000 54,493
Stephen D. Peck(5)....... 1997 88,154 31,318 4,465 50,000 --
Vice President, Chief
Financial Officer
</TABLE>
- --------
(1) Effective with the Acquisition, Messrs. Parsons', Purnell's, and
Goldsmith's, Ms. Segal's and Mr. Peck's annualized base salaries are
approximately $350,000, $225,000, $219,600, $204,400 and $195,400,
respectively.
(2) All dollar amounts reported for fiscal year 1995 relate to payments to
cover the Executive Officers' increased taxes as a result of relocation
expense reimbursements. All dollar amounts reported for fiscal year 1997
and 1996 relate to the personal use of a company car and/or a car
allowance.
(3) The numbers reflect grants of options to purchase shares of Common Stock
under the Holdings 1989 Employee Stock Option Plan (the "Stock Option
Plan"). The Company has not granted stock appreciation rights ("SARs").
(4) Relates to relocation expense reimbursements.
(5) Messrs. Goldsmith and Peck joined the Company in February 1997 and July
1997, respectively.
75
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (3)
---------------------------------------------------- ---------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES/ BASE PRICE
NAME GRANTED(1)(2) FISCAL YEAR ($/SHARE) EXPIRATION DATE 5% 10%
- ---- ------------- ------------ --------- --------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Gary M. Parsons......... 100,000 7.7373% $12.81 Jan. 23, 2007 $ 806,021 $ 2,042,233
Robert L. Goldsmith..... 100,000 7.7373% 12.50 Feb. 3, 2007 786,118 1,992,178
Randy S. Segal.......... 25,000 1.9343% 12.81 Jan. 23, 2007 201,505 510,558
Stephen D. Peck......... 50,000 3.8686% 9.06 July 14, 2007 284,889 721,965
</TABLE>
- --------
(1) The numbers reflect the grant of options to purchase shares of Common
Stock under the Stock Option Plan. The Company has not granted SARs.
(2) The options become exercisable in three annual installments, vesting at
the rate of 33 1/3% per year for three years.
(3) Based on actual option term and annual compounding. The actual value an
Executive Officer may realize will depend upon the excess of the price of
the Common Stock over the exercise price on the date the option is
exercised. Accordingly, there is no assurance that the value ultimately
realized by an Executive Officer, if any, will be at or near the values
indicated.
THE COMPANY'S MANAGEMENT AND COMPENSATION AFTER THE ACQUISITION
The networks, operations and sales activities of American Mobile and ARDIS
are being integrated such that the Company operates through a single
management structure utilizing the talents of the combined management team.
Mr. Purnell serves as President of the Company and of Holdings, and Mr.
Parsons serves as Chief Executive Officer and Chairman of the Board of
Directors of the Company and of Holdings. The Company intends to blend the
management of both American Mobile and ARDIS in key technical, sales,
marketing and financial positions, in order to leverage the capabilities of
each organization.
Management Compensation Following the Acquisition
Holdings and the Company have, historically, maintained an executive
compensation program designed to align the interests of management with those
of its stockholders. In so doing, the goals of the compensation program have
been to attract and retain key employees with significant equity participation
in the performance of Holdings and the Company through the use of stock
incentive grants to executives and key employees, as well as to all employees
of the Company. At the same time, in keeping with the overall program
philosophy, a significant portion of the cash compensation is at-risk, with
discretionary bonus compensation based on attainment of both individual and
corporate performance objectives.
In January 1998, the Board of Directors granted restricted stock to senior
management for the first time. These grants include both a three-year vesting
schedule as well as specific corporate performance targets related to either
the successful fulfillment of the Company's lease of MSAT-2 or the Company's
achievement of positive EBITDA. Unless waived by the Board of Directors,
failure to meet a required performance target would prevent the vesting of the
restricted shares.
76
<PAGE>
The following table indicates the options and restricted stock granted to
the Executive Officers in January 1998, and their cumulative options and
restricted shares granted to date:
<TABLE>
<CAPTION>
JANUARY 1998 TOTAL STOCK OPTION
JANUARY 1998 STOCK OPTION SHARES GRANTED
RESTRICTED STOCK SHARES (INCLUDING JANUARY
EXECUTIVE OFFICER SHARES AWARDED GRANTED 1998 GRANT)
----------------- ---------------- ------------ ------------------
<S> <C> <C> <C>
Gary M. Parsons................ 111,111 100,000 500,000
Walter Purnell(1).............. 80,000 80,000 80,000
Robert Goldsmith............... 75,000 0 100,000
Randy S. Segal................. 60,000 0 123,932
Stephen D. Peck................ 30,000 0 50,000
</TABLE>
- --------
(1) Mr. Purnell's grants were contingent on the successful consummation of the
Acquisition and Mr. Purnell's employment as President of the Company and
of Holdings, each of which transpired on March 31, 1998.
The companies also maintain broad-based employee stock ownership programs,
which also serve to align the interests of the employees with those of the
companies and their stockholders. These programs include an employee stock
purchase program and a company stock match for employees' contributions to a
401(k) savings plan. Holdings and the Company believe that the availability of
these broad-based programs offer additional benefits in recruiting and
retaining its employees.
Since the consummation of the Acquisition, Holdings and the Company have
continued the existing compensation policy.
Management Employment Agreements Following the Acquisition
At December, 1997, Holdings was a party to change in control agreements
(collectively, the "Change in Control Agreements," and individually, a "Change
in Control Agreement") with each of Robert Goldsmith, Stephen Peck and Randy
S. Segal, as well as with other members of senior management (collectively,
"Key
Executives," and individually, a "Key Executive"). Following the Acquisition a
similar agreement was entered into with Walter Purnell. Under the Change in
Control Agreements, the Company considers it essential to its best interests
and to the best interests of its stockholders to retain its key management
personnel. If a change in control occurs during the term of the Change in
Control Agreement and the Company terminates the employment of the Key
Executive within two years following the occurrence of such change in control,
(i) the Company will provide to each Key Executive a lump-sum severance
payment equal to the sum of the Key Executive's annual base salary and the Key
Executive's average bonus, (ii) all options to purchase securities of the
Company granted to the Key Executive pursuant to the Company's Stock Option
Plan or any other Company plan that are then held by the Key Executive will be
accelerated to the later of the date of termination or six months after the
date such option was granted, and shall continue to be exercisable for a two-
year period after such acceleration, and (iii) the Company will provide the
Key Executive with group term life insurance, health insurance, accident and
long-term disability insurance benefits, which shall continue for a twelve-
month period or until the date the Key Executive will reach age sixty-five
substantially similar in all respects to those that the Key Executive was
receiving immediately prior to the termination date. In addition, the Company
will pay to the Key Executive all reasonable legal fees and expenses incurred
by the Key Executive as a result of a termination.
Holdings also has entered into certain arrangements with Mr. Parsons with
respect to change in control of the companies. Mr. Parsons' agreements,
reflected in an initial employment letter agreement and in his subsequent
stock option and restricted stock agreements, provide that Mr. Parsons would
be entitled to one year's salary in the event his employment terminates
following a change in control, and all equity awards would vest upon the
occurrence of a change in control without regard to whether Mr. Parsons'
employment were terminated.
The Acquisition did not trigger a change in control under any of the
arrangements in effect for the Key Executives or for Mr. Parsons.
77
<PAGE>
SECURITY OWNERSHIP
The following table and the accompanying notes set forth certain information
concerning the beneficial ownership of Holdings' Common Stock at March 31,
1998 (except where otherwise indicated) after giving effect to the Acquisition
by each person who is known by Holdings to own beneficially more than five
percent of Holdings' Common Stock. Except as otherwise indicated, each person
listed in the table has informed Holdings that such person has, or following
the Acquisition will have in the case of the pro forma numbers (i) sole voting
and investment power with respect to such person's shares of Common Stock and
(ii) record and beneficial ownership with respect to such person's shares of
Common Stock.
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
NAME OF BENEFICIAL OWNER(1) NUMBER OF SHARES % OF CLASS
--------------------------- ---------------- ----------
<S> <C> <C>
AT&T Wireless Services, Inc.................... 3,881,424(2) 12.0%
1150 Connecticut Avenue, N.W.
Washington, DC 20036
Singapore Telecommunications Ltd............... 4,919,046(3) 15.2%
31 Exeter Road, Comcentre......................
Singapore 239732
Republic of Singapore
Baron Capital, Inc............................. 6,187,933(4) 19.2%
767 Fifth Avenue, 24th Floor...................
New York, NY 10153
Motorola, Inc.................................. 6,549,217(5) 20.6%
1303 East Algonquin Road
Schaumberg, IL 60196
Hughes Communications Satellite 11,566,622(6) 31.8%
Services, Inc.................................
Building S66/D468
Post Office Box 92424
Los Angeles, CA 90009
DIRECTORS AND EXECUTIVE OFFICERS
--------------------------------
Douglas I. Brandon............................. 0 *
Steven A. Dorfman.............................. 1,000 *
Robert L. Goldsmith(7)(8)...................... 111,158 *
Ho Siaw Hong................................... 0 *
Billy J. Parrott(9)(10)........................ 12,000 *
Gary M. Parsons(7)(8).......................... 256,267 *
Stephen D. Peck(7)(8).......................... 30,218 *
Walter V. Purnell, Jr.(8)(11).................. 80,200 *
Andrew A. Quartner(9)(12)...................... 5,500 *
Randy S. Segal(7)(8)........................... 133,556 *
Jack A. Shaw................................... 0 *
Roderick M. Sherwood III....................... 0 *
Michael T. Smith............................... 1,000 *
Yap Chee Keong................................. 0 *
Albert L. Zesiger(13).......................... 44,000 *
All Directors and Executive Officers as a group
(14 persons) (7)(8)(9)........................ 674,899 2.23%
</TABLE>
78
<PAGE>
- --------
* Less than 1%
(1) Certain holders of Common Stock, including each of the beneficial owners
of more than 5% of the Common Stock ("5% Stockholders") listed in the
table are parties to a stockholders' agreement dated December 1, 1993
(the "Stockholders' Agreement"). The 5% Stockholders who are parties to
the Stockholders' Agreement may be deemed to constitute a group having
beneficial ownership of all Common Stock held by members of such group.
Each such 5% Stockholder disclaims beneficial ownership as to shares of
Common Stock held by other 5% Stockholders.
(2) Through its subsidiaries, Transit Communications, Inc. (681,818 shares),
Satellite Communications Investments Corporation (1,344,067 shares), and
Space Technologies Investments, Inc. (1,855,539). Includes 649,347 shares
of Common Stock issuable upon exercise of warrants held by Space
Technologies Investments, Inc., and 230,932 shares of Common Stock
issuable upon exercise of warrants held by Satellite Communications
Investments Corporation. Such warrants are exercisable at any time
through December 20, 1998, at an exercise price of $21.00 per share,
subject to restriction if such exercise would cause the Company's foreign
ownership to exceed the levels permitted by the Communications Act.
Transit Communications, Inc. is indirectly 80%-owned by LIN Broadcasting
Corporation, which is an indirect subsidiary of AT&T Wireless. Satellite
Communications Investments Corporation and Space Technologies Investments,
Inc. are direct or indirect subsidiaries of AT&T Wireless.
(3) Singapore Telecom is approximately 81%-owned by Temasek Holdings
(Private) Ltd., a Singapore holding company that is wholly owned by the
Government of Singapore. Includes 812,500 shares of Common Stock issuable
upon exercise of warrants issued in connection with the Bank Financing.
(4) Includes 812,500 shares of Common Stock issuable upon exercise of
warrants issued in connection with the Bank Financing.
(5) Assumes stockholder approval of the issuance of all Purchase Price shares
of Holdings' Common Stock and warrants for shares of Holdings' Common
Stock to Motorola. Includes 281,040 shares of Common Stock issuable upon
exercise of warrants issued to Motorola in connection with the
Acquisition.
(6) Hughes Communications Satellite Services, Inc. ("HCSSI") is an indirect
wholly-owned subsidiary of Hughes, which is a wholly-owned subsidiary of
General Motors Corporation. Includes 25,000 shares of Common Stock
issuable upon exercise of warrants issued to HCSSI on January 19, 1996,
in connection with a prior interim financing facility guarantee and
4,875,000 shares of Common Stock issuable upon exercise of warrants
issued in connection with the Bank Financing.
(7) Includes shares owned through the Company's matching 401(k) Plan and/or
Employee Stock Purchase Plan.
(8) Includes shares issuable upon the exercise of options granted under the
Stock Option Plan which options are vested and exercisable within sixty
days after March 31, 1998, subject to compliance with applicable
securities laws.
(9) Includes shares issuable upon the exercise of options granted under the
Nonemployee Director Stock Option Plan which options are vested and
exercisable within sixty days after March 31, 1998, subject to compliance
with applicable securities laws.
(10) Includes 7,500 shares owned by Private Networks, Inc., a company in which
Mr. Parrott owns a one-third equity interest. Mr. Parrott disclaims
beneficial ownership as to all such shares of Common Stock.
(11) Includes 200 shares owned by Mr. Purnell's wife, as to which Mr. Purnell
disclaims beneficial ownership.
(12) Includes 1,050 shares owned by trusts for the benefit of each of Mr.
Quartner's three children, of which Mr. Quartner is trustee, and 100
shares owned by Mr. Quartner's wife. Mr. Quartner disclaims beneficial
ownership as to all such shares of Common Stock.
(13) Includes 4,000 shares owned by ZCG Pension Fund managed by Mr. Zesiger.
Mr. Zesiger disclaims beneficial ownership as to all such shares of
Common Stock except to the extent of his pecuniary interest in ZCG
Pension Fund.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Holdings and each holder of shares of Common Stock who acquired such shares
prior to Holdings' initial public offering of 8,500,000 shares of Common
Stock, which was completed December 20, 1993, are parties to a Stockholders'
Agreement, amended and restated as of December 1, 1993 (the "Stockholders'
Agreement"). The remaining parties to the Stockholders' Agreement (principally
Hughes, Singapore Telecom and AT&T Wireless) hold approximately 50% of the
outstanding shares of Common Stock, on a fully diluted basis, without giving
effect to the Units Offering. The Stockholders' Agreement sets forth
agreements among the parties relating to the governance of Holdings, ownership
of shares and the voting and transferability of Common Stock and other
matters. The Stockholders' Agreement limits Holdings' activities to providing
and marketing mobile satellite service, designing, constructing, operating and
maintaining American Mobile's mobile satellite system, engaging in the
communications business, and engaging in activities necessary, appropriate or
reasonably related to the foregoing. Holdings does not currently intend to
engage in any other activities. The Stockholders' Agreement provides that the
parties will not vote to remove members of the Board of Directors except for
cause and that they will not elect or permit the election of a director who is
not a U.S. citizen, if such action would cause Holdings to violate applicable
law, regulations or FCC policy.
In the Stockholders' Agreement, stockholders who, together with their
affiliates, own in excess of five percent of the Common Stock ("Specified
Stockholders") have also agreed to cause their representatives on Holdings'
Board of Directors to appoint to the Executive Committee two directors (and
one alternate) nominated by each of the two Specified Stockholders which are
parties to the Stockholders' Agreement that hold the greatest number of shares
of Common Stock and one director (and one alternate) nominated by the
Specified Stockholder that holds the third greatest number of shares of Common
Stock, provided that each Specified Stockholder making such nomination holds
at least 15% (the "Threshold Percentage"), of the outstanding Common Stock.
Notwithstanding the foregoing, regardless of whether any other Specified
Stockholder which is a party to the Stockholders' Agreement holds the
Threshold Percentage of the outstanding shares of Common Stock, during the
period that any single Specified Stockholder or group of affiliated
stockholders which are parties to the Stockholders' Agreement are the record
holders of more than 50% of the outstanding Common Stock, the Specified
Stockholders have agreed to cause their Board representatives to vote for the
appointment to the Executive Committee of nominees of that Specified
Stockholder. The Stockholders' Agreement also provides that no person shall be
elected to the Board of Directors if such election would violate the
Communications Act or regulations thereunder. Furthermore, the Stockholders'
Agreement provides that no director shall be elected to the Executive
Committee if such election, in the opinion of counsel for Holdings, would
raise a reasonable prospect of violating the Communications Act or regulations
thereunder. Moreover, before any Specified Stockholder may elect a director of
Holdings who is not a United States citizen, it must first allow Singapore
Telecom to elect such a director, provided Singapore Telecom casts sufficient
cumulative votes to elect a director.
The Communications Act provides that certain FCC licenses may not be held by
a corporation of which more than 20% of its capital stock is directly owned of
record or voted by non-U.S. citizens or entities or their representatives (the
Company's wholly-owned subsidiary, AMSC Subsidiary Corporation, as the holder
of the FCC license to construct and operate American Mobile's mobile satellite
services system, is subject to these restrictions). Further, the
Communications Act provides that certain FCC licenses may not be held by a
corporation controlled by another corporation if more than 25% of the
controlling corporation's capital stock is owned of record or voted by non-
U.S. citizens or entities or their representatives ("Alien Ownership"), if the
FCC finds that the public interest is served by the refusal or revocation of
such license (the Company controls AMSC Subsidiary Corporation and therefore
is subject to these restrictions). The Stockholders' Agreement contains
procedures for reducing the risk that Holdings will fail to comply with the
FCC's Alien Ownership restrictions as a result of the ownership of the
stockholders party to that Agreement or their respective holdings in Holdings.
The Stockholders' Agreement provides that when a Specified Stockholder
transfers Common Stock not acquired by such Specified Stockholder in the open
market, the transferee shall become a party to the Stockholders' Agreement,
and shall assume all of the transferring Specified Stockholder's rights and
obligations
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under the Stockholders' Agreement, provided such transferee together with its
affiliates would, giving effect to such transfer, hold in excess of 5.0% of
the issued and outstanding Common Stock.
The Stockholders' Agreement continues until terminated by the affirmative
vote of the holders of three-fourths of the issued and outstanding Common
Stock held by parties to the Stockholders' Agreement. It may be amended by a
three-fourths' vote of the Specified Stockholders, except that amendments to
the provisions providing for registration rights and certain other matters
require the affirmative vote of the holders of three-fourths of the
outstanding Common Stock held by parties to the Stockholders' Agreement.
Stockholders Guarantees
As described below, certain of the principal stockholders of Holdings are
guarantors of the New Bank Financing, and have received certain warrants to
purchase shares of Holdings' Common Stock and other consideration in
connection with providing such guarantee. See "Description of New Bank
Financing."
Bridge Facility
On December 30, 1997, Holdings entered into a bridge facility (the "Bridge
Facility") with HCSSI in the principal amount of up to $10 million, secured by
a pledge of Holdings' interest in its 80%-owned subsidiary, AMRC Holdings,
Inc. The Bridge Facility bore an annual interest rate of 12% and a maturity
date of March 31, 1999, and required mandatory repayment in the event net
proceeds are received from any asset disposition, lease agreement, financing
or equity transaction of Holdings. The Bridge Facility also included a number
of conditions precedent to each borrowing thereunder, including a schedule for
permitted borrowings through February 1998. The Bridge Facility was fully
drawn, and was repaid in full with a portion of the proceeds from the Units
Offering.
Motorola Agreements
In connection with the Acquisition, and pursuant to the Purchase Agreement,
Holdings, Motorola and certain of Holdings' principal stockholders (Hughes,
Singapore Telecom and AT&T Wireless) (the "Participating Stockholders") agreed
to certain participation and registration rights with respect to Holdings'
Common Stock.
Pursuant to the terms of the Participation Rights Agreements entered into on
December 31, 1997 (the "Participation Rights Agreement"), in the event that
one of the Participating Stockholders seeks to transfer its shares of
Holdings' Common Stock other than in a Rule 144 or public stock exchange or
Nasdaq Stock Market transaction (a "Transfer") at a time at which Motorola
beneficially owns 5% or more of Holdings' Common Stock, Motorola has a right
to receive notice of the intended Transfer by such Participating Stockholder
and a right to participate (proportionate to Motorola's stockholdings relative
to those of such Participating Stockholder) in such contemplated Transfer.
Under the Participation Rights Agreement, the Participating Stockholders are
entitled to similar notice and participation rights in the event of an
intended transfer by Motorola of its interests in Holdings' Common Stock.
The Participation Rights Agreement also provides that in connection with the
Acquisition, Motorola is entitled to certain demand and participation
("piggyback") registration rights with respect to the shares of Common Stock
to be issued to Motorola (directly or following exercise of its warrants) as
part of the purchase price of ARDIS. Pursuant to the Agreement, after the
first year following the Acquisition of ARDIS, Motorola or its transferees
is/are entitled to two demand registrations with respect to its shares of
Holdings' Common Stock, subject to certain registration priorities and
postponement rights of Holdings. In addition, Motorola is entitled to
piggyback registration in connection with any registration of securities by
Holdings (whether or not for its own account) on a form which may be used for
registration of the Common Stock held by Motorola. Under the Participation
Rights Agreement, Motorola's piggyback registration rights has certain
priorities for sale over those of other parties (including the Participating
Stockholders). Motorola's priority rights, however, do not extend to a primary
registration on behalf of Holdings or to the registration rights relating to
the Old Notes.
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In addition, under the Participation Rights Agreement, the Participating
Stockholders and Baron agreed with Motorola to vote its shares of Common Stock
in favor of and take such other action as may be necessary to approve the
Acquisition, including the issuance of shares of Holdings' Common Stock to
Motorola in connection with the Acquisition.
As described below, Motorola also agreed to provide the Company with a $10.0
million Vendor Financing Facility. See "Description of Motorola Vendor
Financing."
DESCRIPTION OF NEW BANK FINANCING
In connection with the Units Offering, Holdings, the Company and its
subsidiaries renegotiated the then existing $200.0 million Bank Financing with
Morgan Guaranty Trust Company of New York, Toronto Dominion Bank, Bank of
America National Trust and Savings Association and certain other lenders
(collectively, the "Banks") to provide for two facilities: (i) the Revolving
Credit Facility, a $100.0 million unsecured five-year reducing revolving
credit facility, and (ii) the Term Loan Facility, a $100.0 million five-year,
term loan facility with up to three additional one-year extensions subject to
the Banks' approval. The Revolving Credit Facility will rank pari passu with
the Notes. The Term Loan Facility is secured by the assets of Holdings,
principally its assets in AMRC and the Company, and will be effectively
subordinated to the Revolving Credit Facility and the Notes. The New Bank
Financing will be severally guaranteed by Hughes, Singapore Telecom and Baron
Capital Partners, L.P.
The Banks' placement fee for the New Bank Financing was in an amount of
approximately $500,000. Each of the Revolving Credit Facility and the Term
Loan Facility are severally guaranteed by Hughes, Singapore Telecom and Baron
(the "Bank Facility Guarantors"). In addition, in connection with the New Bank
Financing, the Bridge Facility will be repaid.
The Revolving Credit Facility
The Revolving Credit Facility bears an interest rate, generally, of 50.0
basis points above London Interbank Offered Rate ("LIBOR") and is unsecured,
with a negative pledge on the assets of the Company and its subsidiaries
ranking pari passu with the Notes. The Revolving Credit Facility will be
reduced $10 million each quarter, beginning with the quarter ending June 30,
2002, with the balance due on maturity of March 31, 2003. Certain proceeds
received by the Company would be required to repay and reduce the Revolving
Credit Facility, unless otherwise waived by the Banks and the Bank Facility
Guarantors: (1) 100% of excess cash flow obtained by the Company; (2) the
first $25.0 million net proceeds of the lease or sale of MSAT-2 received by
the Company, and thereafter 75% of the remaining proceeds received from such
lease or sale (the remaining 25% may be retained by the Company for business
operations); (3) 100% of the proceeds of any other asset sales by the Company;
(4) 50% of the net proceeds of any offerings of the Company's equity (the
remaining 50% to be retained by the Company for business operations); and (5)
100% of any major casualty proceeds. At such time as the Revolving Credit
Facility is repaid in full, and subject to satisfaction of the restrictive
payments provisions of the Notes, any prepayment amounts that would otherwise
have been used to prepay the Revolving Credit Facility will be dividended to
Holdings.
The Term Loan Facility
The Term Loan Facility bears an interest rate, generally, of 50.0 basis
points above LIBOR and is secured by the assets of Holdings, principally its
stockholdings in AMRC and the Company. The Term Loan Agreement does not
include any scheduled amortization until maturity, but does contain certain
provisions for prepayment based on certain proceeds received by Holdings,
unless otherwise waived by the Banks and the Bank Facility Guarantors: (1)
100% of excess cash flow obtained by Holdings; (2) the first $25.0 million net
proceeds of the lease or sale of MSAT-2 received by Holdings, and thereafter
75% of the remaining proceeds received from such lease or sale (the remaining
25% to be retained by the Company for business operations); (3) 100% of the
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proceeds of any other asset sales by Holdings; (4) 50% of the net proceeds of
any equity offerings of Holdings (the remaining 50% to be retained by Holdings
for business operations); and (5) 100% of any major casualty proceeds of
Holdings. To the extent that the Term Loan Facility is repaid, the
aforementioned proceeds that would otherwise have been used to repay the Term
Loan Facility will be used to repay and reduce the commitment under the
Revolving Credit Facility.
The Guarantees
In connection with the New Bank Financing, the Bank Facility Guarantors
agreed to extend separate guarantees of the obligations of each of the Company
and Holdings to the Banks, which on a several basis aggregate to $200 million.
In their agreement with each of the Company and Holdings (the "Guarantee
Issuance Agreement"), the Bank Facility Guarantors agreed to make their
guarantees available for the New Bank Financing. The Guarantee Issuance
Agreement includes certain additional agreements of the Company and of
Holdings including with respect to financial performance of the Company
relating to the ratio of debt to EBITDA and service revenue, which, if not
met, could, if not waived, limit the Company's ability to draw down on
additional amounts under the Revolving Credit Facility and result in a default
under the New Bank Financing beginning in 1999. In exchange for the additional
risks undertaken by the Bank Facility Guarantors in connection with the New
Bank Financing, Holdings agreed to compensate the Bank Facility Guarantors,
principally in the form of 1 million additional warrants and repricing of 5.5
million warrants previously issued (together, the "Guarantee Warrants"). The
Guarantee Warrants have an exercise price of $12.51. The Bank Facility
Guarantors have certain demand and piggy-back registration rights with regard
to the unregistered shares of the Company's Common Stock held by them or
issuable upon exercise of the Guarantee Warrants.
Further, in connection with the Guarantee Issuance Agreement, Holdings
agreed to reimburse the Bank Facility Guarantors in the event that the
Guarantors are required to make payment under the Revolving Credit Facility
guarantees, and, in connection with this Reimbursement Commitment provided the
Bank Facility Guarantors a junior security interest with respect to the assets
of Holdings, principally its stockholdings in AMRC and the Company.
DESCRIPTION OF MOTOROLA VENDOR FINANCING
Motorola has agreed to provide the Company with up to $10.0 million of
vendor financing, which will be available to finance up to 75% of the purchase
price of additional base stations needed to meet the buildout requirements of
the UPS Contract. Loans under this facility will bear interest at a rate equal
to LIBOR plus 7.0% and will be guaranteed by Holdings and each subsidiary of
the Company. The terms of such facility will require that amounts borrowed be
secured by the equipment purchased therewith. This commitment is subject to
customary conditions, including due diligence, and there can be no assurance
that the facility will be obtained by the Company on these terms or at all.
See "Risk Factors--Liquidity; Need for Additional Capital."
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were originally sold by the Company on March 31, 1998 to the
Initial Purchasers pursuant to the Purchase Agreement. The Initial Purchasers
subsequently resold the Old Notes to qualified institutional buyers in
reliance on Rule 144A under the Securities Act and pursuant to offers and
sales that occurred outside the United States within the meaning of Regulation
S under the Securities Act. As a condition to the completion of the Units
Offering, the Company and the Subsidiary Guarantors entered into the Debt
Registration Rights Agreement with the Initial Purchasers pursuant to which
the Company and the Subsidiary Guarantors agreed to file with the Commission
the Exchange Offer Registration Statement on the appropriate form under the
Securities Act with respect to an offer to exchange the Old Notes for Exchange
Notes. The Exchange Notes will be substantially identical to the Old Notes,
except that the Exchange Notes will bear a Series B designation and will have
been registered under the Securities Act and, therefore will not contain terms
with respect to transfer
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restrictions (other than those that might be imposed by state securities
laws). If (i) Holdings, the Company and the Subsidiary Guarantors are not
required to file the Exchange Offer Registration Statement or permitted to
commence or accept tenders pursuant to the Exchange Offer because the Exchange
Offer is not permitted by applicable law or Commission policy or (ii) any
Holder of Transfer Restricted Securities (as defined herein) notifies the
Company prior to the 20th business day after the consummation of the Exchange
Offer that (a) it is prohibited by law or Commission policy from participating
in the Exchange Offer or (b) it may not resell the Exchange Notes acquired by
it in the Exchange Offer to the public without delivering a prospectus and the
prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales or (c) it is a broker-dealer and
owns Old Notes acquired directly from the Company or an affiliate of the
Company, Holdings, the Company and the Subsidiary Guarantors will file with
the Commission the Shelf Registration Statement. For purposes of the Exchange
Offer, "Transfer Restricted Securities" means each Old Note until the earliest
to occur of (i) the date on which such Old Note has been exchanged in the
Exchange Offer for an Exchange Note which is entitled to be resold to the
public by the Holder thereof without complying with the prospectus delivery
requirements of the Securities Act, (ii) the date on which such Old Note has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iii) the date on which
such Old Note is distributed to the public pursuant to Rule 144 under the
Securities Act (and purchasers thereof have been issued Exchange Notes) and
each Exchange Note until the date on which such Exchange Note is disposed of
by a broker-dealer pursuant to the section entitled "Plan of Distribution,"
herein.
Under existing interpretations of the staff of the Commission, the Exchange
Notes would, in general, be freely transferable after the Exchange Offer
without further registration under the Securities Act. However, any purchaser
of Old Notes who is an "affiliate" of the Company or intends to participate in
the Exchange Offer for the purpose of distributing the Exchange Notes (i) will
not be able to rely on the interpretations of the staff of the Commission,
(ii) will not be able to tender its Old Notes in the Exchange Offer and (iii)
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any sale or transfer of the Old Notes,
unless such sale or transfer is made pursuant to an exemption from such
requirements.
Each holder who wishes to exchange such Old Notes for Exchange Notes in the
Exchange Offer will be required to make certain representations, including
representations that (i) it is not an affiliate of the Company, (ii) it is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the
Exchange Notes and (iii) it is acquiring the Exchange Notes in its ordinary
course of business. In addition, broker-dealers receiving Exchange Notes in
the Exchange Offer will have a prospectus delivery requirement with respect to
resales of Exchange Notes. The Commission has taken the position that such
broker-dealers may fulfill their prospectus delivery requirements with respect
to the Exchange Notes (other than a resale of an unsold allotment from the
original sale of Old Notes) with the prospectus contained in the Exchange
Offer Registration Statement. Under the Debt Registration Rights Agreement,
the Company is required to allow such broker-dealers to use the prospectus
contained in the Exchange Offer Registration Statement in connection with the
resale of such Exchange Notes for a period of one year after the Expiration
Date.
The Debt Registration Rights Agreement provides that (i) Holdings, the
Company and the Subsidiary Guarantors will file an Exchange Offer Registration
Statement with the Commission on or prior to 45 days after the completion of
the Units Offering, (ii) Holdings, the Company and the Subsidiary Guarantors
will use their best efforts to have the Exchange Offer Registration Statement
declared effective by the Commission on or prior to 135 days after the
completion of the Units Offering, (iii) unless the Exchange Offer would not be
permitted by applicable law or Commission policy, the Company will commence
the Exchange Offer and use its best efforts to issue on or prior to 30
business days after the date on which the Exchange Offer Registration
Statement is declared effective by the Commission, Exchange Notes in exchange
for all Old Notes tendered prior thereto in the Exchange Offer, and (iv) if
obligated to file the Shelf Registration Statement, Holdings, the Company and
the Subsidiary Guarantors will use their best efforts to file the Shelf
Registration Statement with the Commission on or prior to 30 days after such
filing obligation arises and to cause the Shelf Registration Statement to be
declared effective by the Commission on or prior to 135 days after such
obligation arises.
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If (i) Holdings, the Company and the Subsidiary Guarantors fail to file any
of the Registration Statements required by the Debt Registration Rights
Agreement on or before the date specified for such filing, (ii) any of such
Registration Statements is not declared effective by the Commission on or
prior to the date specified for such effectiveness (the "Effectiveness Target
Date"), (iii) Holdings, the Company and the Subsidiary Guarantors fail to
consummate the Exchange Offer within 30 business days of the Effectiveness
Target Date with respect to the Exchange Offer Registration Statement or (iv)
the Shelf Registration Statement or the Exchange Offer Registration Statement
is declared effective but thereafter ceases to be effective or usable in
connection with resales of Transfer Restricted Securities during the periods
specified in the Registration Rights Agreement (each such event referred to in
clauses (i) through (iv) above a "Registration Default"), then Holdings, the
Company and the Subsidiary Guarantors will pay Liquidated Damages to each
Holder of Notes in an amount equal to 0.05% per week per $1,000 principal
amount of the Notes for the first 90 days after such Registration Default. The
amount of the Liquidated Damages will increase, up to a maximum rate of $.50
per week per $1,000 principal amount of Notes, by an additional 0.05 % per
week per $1,000 principal amount of Notes with respect to each subsequent 90-
day period until all Registration Defaults have been cured. Following the cure
of all Registration Defaults, the accrual of Liquidated Damages will cease.
The summary herein of certain provisions of the Debt Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified
in its entirety by, all the provisions of the Debt Registration Rights
Agreement, a copy of which is filed as an exhibit to the Exchange Offer
Registration Statement of which this Prospectus is a part.
Following the consummation of the Exchange Offer, holders of the Old Notes
who were eligible to participate in the Exchange Offer but who did not tender
their Old Notes will not have any further registration rights and such Old
Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for such Old Notes could be adversely
affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old
Notes validly tendered and not withdrawn prior to 5:00 p.m., New York time, on
the Expiration Date. The Company will issue $1,000 principal amount of
Exchange Notes in exchange for each $1,000 principal amount of outstanding Old
Notes accepted in the Exchange Offer. Holders may tender some or all of their
Old Notes pursuant to the Exchange Offer. However, Old Notes may be tendered
only in integral multiples of $1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Old Notes except that (i) the Exchange Notes bear a Series B
designation and a different CUSIP Number from the Old Notes, (ii) the Exchange
Notes have been registered under the Securities Act and hence will not bear
legends restricting the transfer thereof and (iii) the holders of the Exchange
Notes will not be entitled to certain rights under the Debt Registration
Rights Agreement, including the provisions providing for an increase in the
interest rate on the Old Notes in certain circumstances relating to the timing
of the Exchange Offer, all of which rights generally will terminate when the
Exchange Offer is terminated. The Exchange Notes will evidence the same debt
as the Old Notes and will be entitled to the benefits of the Indenture.
The Exchange Offer is not conditioned upon any minimum number of Old Notes
being tendered. As of the date of this Prospectus, $335,000,000 aggregate
principal amount of Old Notes were outstanding.
Holders of Old Notes do not have any appraisal or dissenters rights under
the General Corporation Law of Delaware or the Indenture in connection with
the Exchange Offer. The Company intends to conduct the Exchange Offer in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the Commission thereunder.
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The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the Exchange Notes from the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Old Notes will be
returned, without expense, to the tendering holder thereof as promptly as
practicable after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than transfer taxes in certain circumstances, in connection
with the Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York time, on [ ],
1998, unless the Company, in its sole discretion, extends the Exchange Offer,
in which case the term "Expiration Date" shall mean the latest date and time
to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the
registered holders an announcement thereof, each prior to 9:00 a.m., New York
time, on the next business day after the previously scheduled expiration date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "--Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of
the Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral
or written notice thereof to the registered holders.
INTEREST ON THE EXCHANGE NOTES
The Exchange Note will bear interest from the most recent date to which
interest has been paid or duly provided for on the Old Note surrendered in
exchange for such Exchange Note or, if no interest has been paid or duly
provided for on such Old Note, from March 31, 1998. Interest on the Exchange
Notes is payable semi-annually on each April 1 and October 1 commencing on
October 1, 1998.
Holders of Old Notes whose Old Notes are accepted for exchange will not
receive accrued interest on such Old Notes for any period from and after the
last date to which interest has been paid or duly provided for on the Old
Notes prior to the original issue date of the Exchange Notes or, if no such
interest has been paid or duly provided for will not receive any accrued
interest on such Old Notes, and will be deemed to have waived, the right to
receive any interest on such Old Notes accrued from and after March 31, 1998.
PROCEDURES FOR TENDERING
For a holder of Old Notes to tender Old Notes validly pursuant to the
Exchange Offer, a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantee, or (in the case
of a book-entry transfer), an Agent's Message in lieu of the Letter of
Transmittal, and any other required documents, must be received by the
Exchange Agent at the address set forth in the Letter of Transmittal prior to
5:00 p.m., New York time, on the Expiration Date. In addition, prior to 5:00
p.m., New York time, on the Expiration Date, either (a) certificates for
tendered Old Notes must be received by the Exchange Agent at such address or
(b) such Old Notes must be transferred pursuant to the procedures for book-
entry transfer described below (and a confirmation of such tender received by
the Exchange Agent, including an Agent's Message if the tendering holder has
not delivered a Letter of Transmittal).
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The term "Agent's Message" means a message transmitted by the Depository,
received by the Exchange Agent and forming part of the confirmation of a book-
entry transfer, which states that the Depository has received an express
acknowledgment from the participant in the Depository tendering Old Notes
which are the subject of such book-entry confirmation that such participant
has received and agrees to be bound by the terms of the Letter of Transmittal
and that the Company may enforce such agreement against such participant. In
the case of an Agent's Message relating to guaranteed delivery, the term means
a message transmitted by the Depository and received by the Exchange Agent,
which states that the Depository has received an express acknowledgment from
the participant in the Depository tendering Old Notes that such participant
has received and agrees to be bound by the Notice of Guaranteed Delivery.
By tendering Old Notes pursuant to the procedures set forth above, each
holder will make to the Company the representations set forth above in the
third paragraph under the heading "--Purpose and Effect of the Exchange
Offer."
The tender by a holder and the acceptance thereof by the Company will
constitute agreement between such holder and the Company in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE
RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO
CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR NOTES SHOULD BE SENT TO THE
COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH
HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to
tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. See "Signatures
On This Letter, Bond Powers and Endorsements, Guarantee of Signatures"included
with the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Old Notes tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal
or (ii) for the account of an Eligible Institution. In the event that
signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, are required to be guaranteed, such guarantee must be by a member firm
of the Medallion System (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered
holder as such registered holder's name appears on such Old Notes with the
signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, offices of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal.
The Company understands that the Exchange Agent will make a request promptly
after the date of this Prospectus to establish accounts with respect to the
Old Notes at the book-entry transfer facility, The Depository Trust Company
("DTC" or the "Book-Entry Transfer Facility"), for the purpose of facilitating
the Exchange
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Offer, and subject to the establishment thereof, any financial institution
that is a participant in the Book-Entry Transfer Facility's system may make
book-entry delivery of Old Notes by causing such Book-Entry Transfer Facility
to transfer such Old Notes into the Exchange Agent's account with respect to
the Old Notes in accordance with the Book-Entry Transfer Facility's procedures
for such transfer. Although delivery of the Old Notes may be effected through
book-entry transfer into the Exchange Agent's account at the Book-Entry
Transfer Facility, an appropriate Letter of Transmittal properly completed and
duly executed with any required signature guarantee, or, in the case of a
book-entry transfer, an Agent's Message in lieu of the Letter of Transmittal
and all other required documents must in each case be transmitted to and
received or confirmed by the Exchange Agent at its address set forth in the
Letter of Transmittal on or prior to the Expiration Date, or, if the
guaranteed delivery procedures described below are complied with, within the
time period provided under such procedures. Delivery of documents to the Book-
Entry Transfer Facility does not constitute delivery to the Exchange Agent.
The Exchange Agent and DTC have confirmed that the Exchange Offer is
eligible for the DTC Automated Tender Offer Program ("ATOP"). Accordingly, DTC
participants may electronically transmit their acceptance of the Exchange
Offer by causing DTC to transfer Old Notes to the Exchange Agent in accordance
with DTC's ATOP procedures for transfer. DTC will then send an Agent's Message
to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old
Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute
right to reject any and all Old Notes not properly tendered or any Old Notes
the Company's acceptance of which would, in the opinion of counsel for the
Company, be unlawful. The Company also reserves the right in its sole
discretion to waive any defects, irregularities or conditions of tender as to
particular Old Notes. The Company's interpretation of the terms and conditions
of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be
cured within such time as the Company shall determine. Although the Company
intends, to notify holders of defects or irregularities with respect to
tenders of Old Notes, neither the Company, the Exchange Agent nor any other
person shall incur any liability for failure to give such notification.
Tenders of Old Notes will not be deemed to have been made until such defects
or irregularities have been cured or waived. Any Old Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent or (iii) who
cannot complete the procedures for book-entry transfer, prior to the
Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Old Notes and the principal amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within five
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or facsimile thereof) together with the certificate(s)
representing the Old Notes (or a confirmation of book-entry transfer of
such Old Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility), and any other documents required by the Letter of Transmittal
will be deposited by the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (of
facsimile thereof), as well as the certificates representing all tendered
Old Notes in proper form for transfer (or a confirmation of book-entry
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transfer of such Old Notes into the Exchange Agent's account at the Book-
Entry Transfer Facility), and all other documents required by the Letter of
Transmittal are received by the Exchange Agent upon five New York Stock
Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a telegram, telex,
letter or facsimile transmission notice of withdrawal must be received by the
Exchange Agent at its address set forth in the Letter of Transmittal prior to
5:00 p.m., New York time, on the Expiration Date. Any such notice of
withdrawal must specify the name of the person having deposited the Old Notes
to be withdrawn (the "Depositor"), identify the Old Notes to be withdrawn
(including the principal amount of such Old Notes) and (where certificates for
Old Notes have been transmitted) specify the name in which such Old Notes are
registered, if different from that of the Depositor. In the case of Old Notes
transferred by book-entry transfer, specify the name and number of the account
at the Book-Entry Transfer Facility to be credited. If certificates for Old
Notes have been delivered or otherwise identified to the Exchange Agent, then
prior to the release of such certificates the Depositor must also submit the
serial numbers of the particular certificates to be withdrawn and a signed
notice of withdrawal with signatures guaranteed by an Eligible Institution
unless such Depositor is an Eligible Institution in which case such guarantee
will not be required. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company,
whose determination shall be final and binding on all parties. Any Old Notes
so withdrawn will be deemed not to have been validly tendered for purposes of
the Exchange Offer and no Exchange Notes will be issued with respect thereto
unless the Old Notes so withdrawn are validly retendered. Any Old Notes which
have been tendered but which are not accepted for exchange will be returned to
the holder thereof without cost to such holder as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn Old Notes may be retendered by following one of the procedures
described above under "--Procedures for Tendering" at any time prior to the
Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange Exchange Notes for, any Old
Notes, and may terminate or amend the Exchange Offer as provided herein before
the acceptance of such Old Notes, if:
(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer
which, in the Company's reasonable discretion, might materially impair the
ability of the Company to proceed with the Exchange Offer or any material
adverse development has occurred in any existing action or proceeding with
respect to the Company or any of its subsidiaries; or
(b) any law, statute, rule, regulation or interpretation by the staff of
the Commission is proposed, adopted or enacted, which, in the Company's
reasonable discretion, might materially impair the ability of the Company
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange offer to the Company; or
(c) any governmental approval has not been obtained, which approval the
Company shall, in the Company's reasonable discretion, deem necessary for
the consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its reasonable discretion that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Old
Notes and return all tendered Old Notes to the tendering holders, (ii) extend
the Exchange Offer and retain all Old Notes tendered prior to the expiration
of the Exchange Offer,
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subject, however, to the rights of holders to withdraw such Old Notes (see "--
Withdrawal of Tenders"), or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all properly tendered Old Notes which
have not been withdrawn.
EXCHANGE AGENT
State Street Bank and Trust Co. (the "Exchange Agent") has been appointed as
Exchange Agent for the Exchange Offer. Questions and requests for assistance,
requests for additional copies of this Prospectus or of the Letter of
Transmittal and requests for Notice of Guaranteed Delivery should be directed
to the Exchange Agent at the address indicated in the Letter of Transmittal.
Delivery to an address other than as set forth in the Letter of Transmittal
will not constitute a valid delivery.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection
therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the
Exchange Agent and Trustee, accounting and legal fees and printing costs,
among others.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the Old
Notes, which is face value, as reflected in the Company's accounting records
on the date of exchange. Accordingly, no gain or loss for accounting purposes
will be recognized by the Company. The expenses of the Exchange Offer will be
expensed over the term of the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Old Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Old Notes
may be resold only.
RESALE OF THE EXCHANGE NOTES
With respect to resales of Exchange Notes, based on interpretations by the
staff of the Commission set forth in no-action letters issued to third parties
(for example, the letters of the commission to (i) Exxon Capital Holdings
Corporation, available May 13, 1988, (ii) Morgan Stanley & Co., Inc. available
June 5, 1991 and (iii) Shearman & Sterling, available July 2, 1993), the
Company believes that a holder or other person (other than a person that is an
affiliate of the Company within the meaning of Rule 405 under the Securities
Act) who receives Exchange Notes in exchange for Old Notes in the ordinary
course of business and who is not participating, does not intend to
participate, and has no arrangement or understanding with any person to
participate, in the distribution of the Exchange Notes, will be allowed to
resell the Exchange Notes to the public without further registration under the
Securities Act and without delivering to the purchasers of the Exchange Notes
a prospectus that satisfies the requirements of Section 10 of the Securities
Act. However, if any holder acquires Exchange Notes in the Exchange Offer for
the purpose of distributing or participating in a distribution of the Exchange
Notes, such holder cannot rely on the position of the staff of the Commission
enunciated in such no-action letters
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or any similar interpretive letters, and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction, unless an exemption from registration is otherwise
available. Further, each Participating Broker-Dealer that receives Exchange
Notes for its own account in exchange for Old Notes, where such Old Notes were
acquired by such Participating Broker-Dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Notes.
Each holder of Old Notes who wishes to exchange Old Notes for Exchange Notes
in the Exchange Offer will be required to represent that (i) it is not an
affiliate of the Company, (ii) it is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the Exchange Notes and (iii) it is acquiring
the Exchange Notes in its ordinary course of business. Each broker-dealer that
receives Exchange Notes for its own account pursuant to the Exchange Offer
must acknowledge that it acquired the Old Notes for its own account as the
result of market-making activities or other trading activities and must agree
that it will deliver a prospectus meeting the requirements of the Securities
Act in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. Based on the position taken by the staff of
the Division of Corporation Finance of the Commission in the interpretive
letters referred to above, the Company believes that Participating Broker-
Dealers who acquired Old Notes for their own accounts as a result of market-
making activities or other trading activities may fulfill their prospectus
delivery requirements with respect to the Exchange Notes received upon
exchange of such Old Notes (other than Old Notes which represent an unsold
allotment from the original sale of the Old Notes) with a prospectus meeting
the requirements of the Securities Act, which may be the prospectus prepared
for an exchange offer so long as it contains a description of the plan of
distribution with respect to the resale of such Exchange Notes. Accordingly,
this Prospectus, as it may be amended or supplemented from time to time, may
be used by a Participating Broker-Dealer during the period referred to below
in connection with resales of Exchange Notes received in exchange for Old
Notes where such Old Notes were acquired by such Participating Broker-Dealer
for its own account as a result of market-making or such other trading
activities. Subject to certain provisions set forth in the Debt Registration
Rights Agreement, the Company has agreed that this Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such Exchange Notes for a period
ending one year after the Expiration Date. Such notice may be given in the
space provided for that purpose in the Letter of Transmittal or may be
delivered to the Exchange Agent at one of the addresses set forth in the
Letter of Transmittal. See "Plan of Distribution." Any Participating Broker-
Dealer who is an "affiliate" of the Company may not rely on such interpretive
letters and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
DESCRIPTION OF THE EXCHANGE NOTES
GENERAL
The Old Notes were issued and the Exchange Notes will be issued pursuant to
an Indenture (the "Indenture") among the Company, the Guarantors and State
Street Bank and Trust Co., as trustee (the "Trustee"). The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (the "Trust Indenture Act"). The
Notes are subject to all such terms, and Holders of Notes are referred to the
Indenture and the Trust Indenture Act for a statement thereof. The following
summary of the material provisions of the Indenture does not purport to be
complete and is qualified in its entirety by reference to the Indenture,
including the definitions therein of certain terms used below. Copies of the
Unit Agreement, the Indenture, the Pledge Agreement, and the Debt Registration
Rights Agreement are available as set forth under "--Additional Information."
The definitions of certain terms used in the following summary are set forth
below under "--Certain Definitions." For purposes of this summary, the term
"Company" refers only to AMSC Acquisition Company, Inc. and not to any of its
Subsidiaries.
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The Exchange Notes will be general unsecured obligations of the Company and
will rank pari passu in right of payment with all current and future unsecured
senior Indebtedness of the Company, including Indebtedness under the Revolving
Credit Facility. However, all borrowings under the Revolving Credit Facility
have the benefit of a full guarantee from the Shareholder Guarantors, each of
whom have substantially greater resources than the Company. As of March 31,
1998, after giving effect to the Acquisition, the Units Offering and the
acquisition of MCSS (the "Transactions"), the Company had approximately $374.2
million ($365.7 million net of debt discount) of Indebtedness outstanding. The
Indenture permits additional borrowings, including borrowings under the
Revolving Credit Facility, in the future. Further, commencing April 1, 2001
(three years after the date of the Indenture), the Company will be permitted
to pay dividends to Holdings to permit Holdings to meet its interest expense
obligations with respect to the Term Loan Facility, subject to certain
limitations.
SUBSIDIARY GUARANTEES
The Company's payment obligations under the Exchange Notes will be jointly
and severally guaranteed (the "Subsidiary Guarantees") by the Subsidiary
Guarantors. The obligations of each Subsidiary Guarantor under its Subsidiary
Guarantee will be limited so as not to constitute a fraudulent conveyance
under applicable law. See, however, "Risk Factors--Fraudulent Conveyance
Considerations."
The Indenture provides that no Subsidiary Guarantor may consolidate with or
merge with or into (whether or not such Subsidiary Guarantor is the surviving
Person), another corporation, Person or entity whether or not affiliated with
such Subsidiary Guarantor unless (i) subject to the provisions of the
following paragraph, the Person formed by or surviving any such consolidation
or merger (if other than such Subsidiary Guarantor) assumes all the
obligations of such Subsidiary Guarantor pursuant to a supplemental indenture
in form and substance reasonably satisfactory to the Trustee, under the Unit
Agreement, the Notes, the Indenture, the Pledge Agreement and the Debt
Registration Rights Agreement; (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists; and (iii) except in the
case of any such merger or consolidation with the Company or another
Subsidiary Guarantor, the Company would be permitted by virtue of the
Company's pro forma Debt to Cash Flow Ratio, immediately after giving effect
to such transaction, to incur at least $1.00 of additional Indebtedness
pursuant to the Debt to Cash Flow Ratio test set forth in the covenant
described below under the caption "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock."
The Indenture provides that in the event of a sale or other disposition of
all of the assets of any Subsidiary Guarantor, by way of merger, consolidation
or otherwise, or a sale or other disposition of all of the capital stock of
any Subsidiary Guarantor, then such Subsidiary Guarantor (in the event of a
sale or other disposition, by way of such a merger, consolidation or
otherwise, of all of the capital stock of such Subsidiary Guarantor) or the
corporation acquiring the property (in the event of a sale or other
disposition of all of the assets of such Subsidiary Guarantor) will be
released and relieved of any obligations under its Subsidiary Guarantee;
provided that the Net Proceeds of such sale or other disposition are applied
in accordance with the applicable provisions of the Indenture. See "Repurchase
at Option of Holders--Asset Sales."
"Subsidiary Guarantors" means (i) each existing Subsidiary of the Company
and (ii) any other Subsidiary of the Company that executes a Subsidiary
Guarantee in accordance with the provisions of the Indenture, and their
respective successors and assigns.
HOLDINGS GUARANTEE
The Company's payment obligations under the Exchange Notes will be
guaranteed on a subordinated basis (the "Holdings Guarantee") by Holdings. The
Holdings Guarantee of Holdings will be subordinated to the prior payment in
full of all Senior Indebtedness of Holdings, to the same extent as Holdings'
guarantee of the Revolving Credit Facility. As of March 31, 1998, after giving
effect to the Transactions, on a stand-alone basis Holdings had $100.0 million
in aggregate principal amount of Senior Indebtedness outstanding. Holdings'
will not be subject to any of the covenants or restrictions under the
Indenture governing the Notes. Accordingly, the
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Indenture does not restrict Holdings' ability to incur additional
indebtedness, issue preferred stock or other capital stock, pay dividends or
make other payments, enter into transactions with affiliates, make certain
asset dispositions, merge or consolidate with, or transfer substantially all
of its assets to, another person, encumber assets, or engage in certain
business activities.
The Indenture provides that Holdings may not consolidate with or merge with
or into (whether or not Holdings is the surviving Person), another
corporation, Person or entity whether or not affiliated with Holdings unless
(i) the Person formed by or surviving any such consolidation or merger (if
other than Holdings) assumes all the obligations of Holdings pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, the Unit Agreement, the Indenture, the Pledge
Agreement, the Debt Registration Rights Agreement and the Warrant Registration
Rights Agreement; and (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists.
SUBORDINATION OF HOLDINGS GUARANTEE
The Obligations of Holdings with respect to its Holdings Guarantee are
subordinated in right of payment, as set forth in the Indenture, to the prior
payment in full of all Senior Indebtedness of Holdings, whether outstanding on
the date of the Indenture or thereafter incurred.
Upon any distribution to creditors of Holdings in a liquidation or
dissolution of Holdings or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to Holdings or its property, an
assignment for the benefit of creditors or any marshalling of Holdings' assets
and liabilities, the holders of Senior Indebtedness of Holdings will be
entitled to receive payment in full of all Obligations due in respect of such
Senior Indebtedness of Holdings (including interest after the commencement of
any such proceeding at the rate specified in the applicable Senior
Indebtedness of Holdings) before the Holders of Notes will be entitled to
receive any payment with respect to the Holdings Guarantee, and until all
Obligations with respect to Senior Indebtedness of Holdings are paid in full,
any distribution to which the Holders of Notes would be entitled shall be made
to the holders of Senior Indebtedness of Holdings (except that Holders of
Notes may receive and retain Permitted Junior Securities and payments made
from the trust described under "--Legal Defeasance and Covenant Defeasance").
Holdings also may not make any payment upon or in respect of the Holdings
Guarantee (except in Permitted Junior Securities or from the trust described
under "--Legal Defeasance and Covenant Defeasance") if (i) a default in the
payment of the principal of, premium, if any, or interest on Designated Senior
Indebtedness occurs and is continuing beyond any applicable period of grace or
(ii) any other default occurs and is continuing with respect to Designated
Senior Indebtedness that permits holders of the Designated Senior Indebtedness
as to which such default relates to accelerate its maturity and the Trustee
receives a notice of such default (a "Payment Blockage Notice") from Holdings
or the holders of any Designated Senior Indebtedness. Payments on the Holdings
Guarantee may and shall be resumed (a) in the case of a payment default, upon
the date on which such default is cured or waived and (b) in case of a
nonpayment default, the earlier of the date on which such nonpayment default
is cured or waived or 179 days after the date on which the applicable Payment
Blockage Notice is received, unless the maturity of any Designated Senior
Indebtedness has been accelerated. No new period of payment blockage may be
commenced unless and until (i) 360 days have elapsed since the effectiveness
of the immediately prior Payment Blockage Notice and (ii) all scheduled
payments of principal, premium, if any, and interest on the Notes that have
come due have been paid in full in cash. No nonpayment default that existed or
was continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice.
The Indenture further requires that Holdings promptly notify holders of
Senior Indebtedness of Holdings if payment of the Notes is accelerated because
of an Event of Default.
As a result of the subordination provisions described above, in the event of
a liquidation or insolvency, Holders of Notes may recover less ratably than
creditors of Holdings who are holders of Senior Indebtedness of
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Holdings. After giving effect to the Units Offering and the application of the
proceeds therefrom, the principal amount of Senior Indebtedness of Holdings on
a stand-alone basis outstanding at September 30, 1997, was approximately
$100.0 million. The Indenture does not limit the amount of additional
Indebtedness, including Senior Indebtedness of Holdings, that Holdings and its
subsidiaries can incur.
"Designated Senior Indebtedness" means (i) any Indebtedness outstanding
under the Term Loan Facility or (ii) any other Senior Indebtedness of Holdings
the principal amount of which is $25.0 million or more and that has been
designated by Holdings as "Designated Senior Indebtedness."
"Permitted Junior Securities" means Equity Interests in Holdings or debt
securities that are subordinated to all Senior Debt of Holdings (and any debt
securities issued in exchange for Senior Indebtedness of Holdings) to
substantially the same extent as, or to a greater extent than, the Holdings
Guarantee is subordinated to Senior Indebtedness of Holdings pursuant to the
Indenture.
"Senior Indebtedness" means Obligations with respect to the Term Loan
Facility and any other Indebtedness of Holdings now or hereafter incurred
except such Indebtedness specifically designated by Holdings as subordinated
Indebtedness at the time of its incurrence. Notwithstanding anything to the
contrary in the foregoing, Senior Indebtedness will not include (w) any
liability for federal, state, local or other taxes owed or owing by Holdings,
(x) any Indebtedness of Holdings to any of its Subsidiaries or other
Affiliates, (y) any trade payables or (z) any Indebtedness that is incurred in
violation of the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Exchange Notes will be limited in aggregate principal amount to $335.0
million and will mature on March 31, 2008. Interest on the Exchange Notes will
accrue at the rate of 12 1/4% per annum and will be payable semi-annually in
arrears on April 1 and October 1, commencing on October 1, 1998, to Holders of
record on the immediately preceding March 15 and September 15. Interest on the
Exchange Notes will accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from March 26, 1998. Interest will
be computed on the basis of a 360-day year comprised of twelve 30-day months.
Principal, premium, if any, and interest and Liquidated Damages on the
Exchange Notes will be payable at the office or agency of the Company
maintained for such purpose within the City and State of New York or, at the
option of the Company, payment of interest and Liquidated Damages may be made
by check mailed to the Holders of the Exchange Notes at their respective
addresses set forth in the register of Holders of the Exchange Notes; provided
that all payments of principal, premium, interest and Liquidated Damages with
respect to the Exchange Notes the Holders of which have given wire transfer
instructions to the Company will be required to be made by wire transfer of
immediately available funds to the accounts specified by the Holders thereof.
Until otherwise designated by the Company, the Company's office or agency in
New York will be the office of the Trustee maintained for such purpose. The
Exchange Notes will be issued in denominations of $1,000 and integral
multiples thereof.
INTEREST RESERVE
A portion of the Company's obligations under the Exchange Notes will be
secured pending disbursement pursuant to the Pledge Agreement by a pledge of
the Escrow Amount. At the Closing of the Units Offering, the initial amount
deposited in the Escrow Amount was precisely determined in order to provide
sufficient funds to enable to the Company to make the first six interest
payments with respect to the Notes. The initial amount deposited in the Escrow
Amount is approximately $113.0 million (the "Cash Collateral"). The Pledge
Agreement provides for the grant by the Company to the Trustee of a security
interest in the Cash Collateral for the benefit of the holders of the Notes.
Such security interest secures the payment and performance when due of the
Obligations of the Company under the Indenture with respect to the Notes and
under such Notes, as provided in the Pledge Agreement. The Liens created by
the Pledge Agreement are first priority security interests in the Cash
Collateral. The ability of holders to realize upon any such funds or
securities may be subject to certain bankruptcy law limitations in the event
of a bankruptcy of the Company.
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The Cash Collateral will be disbursed from the Escrow Amount only to pay
interest on the Notes and, upon certain repurchases or redemptions of the
Notes, to pay principal of and premium, if any, thereon. Pending such
disbursements, all funds contained in the Escrow Amount will be invested in
Cash Equivalents. Upon the acceleration of the maturity of the Notes or the
failure to pay principal at maturity or upon certain redemptions and
repurchases of the Notes, the Pledge Agreement will provide for the
foreclosure by the Trustee upon the net proceeds of the Escrow Amount. Under
the terms of the Indenture, the proceeds of the Escrow Amount shall be
applied, first, to amounts owing to the Trustee in respect of fees and
expenses of the Trustee and second, to the Obligations under the Notes and the
Indenture.
OPTIONAL REDEMPTION
The Notes are not be redeemable at the Company's option prior to April 1,
2003. Thereafter, the Notes will be subject to redemption at any time at the
option of the Company, in whole or in part, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the applicable redemption date, if
redeemed during the twelve-month period beginning on April 1 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003.............................................................. 106.125%
2004.............................................................. 104.083%
2005.............................................................. 102.042%
2006 and thereafter............................................... 100.000%
</TABLE>
Notwithstanding the foregoing, during the first 36 months after the date of
the Indenture, the Company may redeem up to 35% of the aggregate principal
amount of Notes originally issued under the Indenture at a redemption price of
112.25% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the redemption date, with the net cash
proceeds to the Company of an Equity Offering; provided that at least $217.8
million in aggregate principal amount of Notes remain outstanding immediately
after the occurrence of such redemption (excluding Notes held by the Company
and its Subsidiaries); and provided, further, that such redemption shall occur
within 45 days of the date of the closing of such Equity Offering.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
the Notes are listed, or, if the Notes are not so listed, on a pro rata basis,
by lot or by such method as the Trustee shall deem fair and appropriate;
provided that no Notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than
60 days before the redemption date to each Holder of Notes to be redeemed at
its registered address. Notices of redemption may not be conditional. If any
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. Notes called for redemption become due on the date fixed
for redemption. On and after the redemption date, interest will cease to
accrue on the Notes or portions of the Notes called for redemption.
MANDATORY REDEMPTION
The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Exchange Notes except as set forth under
"Repurchase at the Option of Holders--Change of Control."
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REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, each Holder of Exchange Notes
will have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Notes
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to
the date of purchase (the "Change of Control Payment"). Within ten days
following any Change of Control, the Company will mail a notice to each Holder
describing the transaction or transactions that constitute the Change of
Control and offering to repurchase Notes on the date specified in such notice,
which date shall be no earlier than 30 days and no later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date"), pursuant to
the procedures required by the Indenture and described in such notice. The
Company will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of the
Notes as a result of a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being purchased by
the Company. The Paying Agent will promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date. Unless the Company
defaults in the payment for any Notes properly tendered pursuant to the Change
of Control Offer, any Notes accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control
Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the Holders of the Notes to require that the
Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
The Company's other senior indebtedness contains prohibitions of certain
events that would constitute a Change of Control. In addition, the exercise by
the Holders of Notes of their right to require the Company to repurchase the
Notes could cause a default under such other indebtedness, even if the Change
of Control itself does not, due to the financial effect of such repurchases on
the Company. Finally, the Company's ability to pay cash to the Holders of
Notes upon a repurchase may be limited by the Company's then existing
financial resources. See "Risk Factors--Possible Inability to Fund a Change of
Control."
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the Indenture applicable to a Change of Control Offer made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all
or substantially all of the assets of the Company and its Subsidiaries taken
as a whole to any "person" (as such term is used in Section 13(d)(3) of the
Exchange Act) other than a Principal or a Related Party of a Principal (as
defined below), (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company, (iii) the
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consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as defined above),
other than the Principals and their Related Parties, becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the
Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire,
whether such right is currently exercisable or is exercisable only upon the
occurrence of a subsequent condition), directly or indirectly, of more than
40% of the Voting Stock of Holdings (measured by voting power rather than
number of shares), (iv) the consummation of the first transaction (including,
without limitation, any merger or consolidation) the result of which is that
any "person" (as defined above) becomes the "beneficial owner" (as defined
above), directly or indirectly, of more of the Voting Stock of Holdings
(measured by voting power rather than number of shares) than is at the time
"beneficially owned" (as defined above) by the Principals and their Related
Parties in the aggregate, (v) the first day on which a majority of the members
of the Board of Directors of the Company or Holdings are not Continuing
Directors or (vi) the first day on which Holdings ceases to own 80% of the
outstanding Voting Stock of the Company.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise established definition of the phrase under
applicable law. Accordingly, the ability of a Holder of Notes to require the
Company to repurchase such Notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets of the Company
and its Subsidiaries taken as a whole to another Person or group may be
uncertain.
"Continuing Director" means, as of any date of determination, any member of
the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture, (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election or (iii) was a designee of any Principal at a time when
such Principal owned more than 10% of the Voting Stock of Holdings.
"Principals" means Hughes, Singapore Telecom, AT&T Wireless and Motorola.
"Related Party" with respect to any Principal means (A) any controlling
stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such Principal or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A).
Asset Sales
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Subsidiary, as the case may be) receives consideration at the time of such
Asset Sale at least equal to the fair market value (evidenced by a resolution
of the Board of Directors set forth in an Officers' Certificate delivered to
the Trustee) of the assets or Equity Interests issued or sold or otherwise
disposed of and (ii) at least 75% of the consideration therefor received by
the Company or such Subsidiary is in the form of cash or Cash Equivalents;
provided that the amount of (x) any liabilities (as shown on the Company's or
such Subsidiary's most recent balance sheet), of the Company or any Subsidiary
(other than contingent liabilities and liabilities that are by their terms
subordinated to the Notes or any guarantee thereof) that are assumed by the
transferee of any such assets pursuant to a customary novation agreement that
releases the Company or such Subsidiary from further liability and (y) any
securities, notes or other obligations received by the Company or any such
Subsidiary from such transferee that are contemporaneously (subject to
ordinary settlement periods) converted by the Company or such Subsidiary into
cash (to the extent of the cash received), shall be deemed to be cash for
purposes of this provision.
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Within 180 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds, at its option, (a) to repay
Indebtedness under a Credit Facility, (b) to the acquisition of all of the
assets of, or all of the Voting Stock of, another Permitted Business, the
making of a capital expenditure or the acquisition of other long-term assets
that are used or useful in a Permitted Business (and the payment of related
expenses) or (c) in the case of Net Proceeds received by the Company pursuant
to the Satellite Lease Arrangements, for working capital purposes. Pending the
final application of any such Net Proceeds, the Company may temporarily reduce
revolving credit borrowings or otherwise invest such Net Proceeds in any
manner that is not prohibited by the Indenture. Any Net Proceeds from Asset
Sales that are not applied or invested as provided in the first sentence of
this paragraph will be deemed to constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $10.0 million, the Company will be
required to make an offer to all Holders of Notes (an "Asset Sale Offer") to
purchase the maximum principal amount of Notes that may be purchased out of
the Excess Proceeds, at an offer price in cash in an amount equal to 100% of
the principal amount thereof plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date of purchase, in accordance with the
procedures set forth in the Indenture. To the extent that any Excess Proceeds
remain after consummation of an Asset Sale Offer, the Company may use such
Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If
the aggregate principal amount of Notes tendered into such Asset Sale Offer
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
Notwithstanding the foregoing, the Company and its Subsidiaries will be
permitted to consummate Asset Sales of Communications Assets without complying
with the first paragraph of this covenant if (x) at least 75% of the
consideration received by the Company and its Subsidiaries in respect of such
Asset Sale constitutes either Communications Assets, cash or Cash Equivalents,
and (y) any Net Proceeds received by the Company or any of its Subsidiaries in
connection with such Asset Sale are applied in accordance with the foregoing
paragraph and (z) the Company and its Subsidiaries receives consideration at
the time of such Asset Sale at least equal to the fair market value (evidenced
by a resolution of the Board of Directors set forth in a Officer's Certificate
delivered to the trustee, such determination to be based upon an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
national standing if such fair market value exceeds $1.0 million) of the
Communications Assets sold or otherwise disposed of.
CERTAIN COVENANTS
Restricted Payments
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly: (i) declare or pay any dividend
or make any other payment or distribution on account of the Company's or any
of its Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company
or any of its Subsidiaries) or to the direct or indirect holders of the
Company's or any of its Subsidiaries' Equity Interests in their capacity as
such (other than dividends or distributions payable in Equity Interests (other
than Disqualified Stock) of the Company or to the Company or a Subsidiary of
the Company); (ii) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company or other Affiliate of the Company (other than
any such Equity Interests owned by the Company or any Wholly Owned Subsidiary
of the Company); (iii) make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value any Indebtedness that
is subordinated to the Notes, except a payment of interest or principal at
Stated Maturity; or (iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
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(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the Reference Period, have been permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Debt to Cash Flow
Ratio test set forth in the first paragraph of the covenant described above
under caption "--Incurrence of Indebtedness and Issuance of Preferred
Stock;" and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Subsidiaries after
the date of the Indenture (excluding Restricted Payments permitted by
clauses (ii), (iii) and (iv) of the next succeeding paragraph), is less
than the sum, without duplication, of (i) 50% of the Consolidated Net
Income of the Company for the period (taken as one accounting period) from
the beginning of the first fiscal quarter commencing after the date of the
Indenture to the end of the Company's most recently ended fiscal quarter
for which internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such period is
a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net
cash proceeds received by the Company since the date of the Indenture as a
contribution to its common equity capital or from the issue or sale of
Equity Interests of the Company (other than Disqualified Stock) or from the
issue or sale of Disqualified Stock or debt securities of the Company that
have been converted into such Equity Interests (other than Equity Interests
(or Disqualified Stock or convertible debt securities) sold to a Subsidiary
of the Company), plus (iii) to the extent that any Restricted Investment
that was made after the date of the Indenture is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (A) the cash return of capital
with respect to such Restricted Investment (less the cost of disposition,
if any) and (B) the initial amount of such Restricted Investment.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the
Company in exchange for, or out of the net cash proceeds of the substantially
concurrent sale (other than to a Subsidiary of the Company) of, other Equity
Interests of the Company (other than any Disqualified Stock); provided that
the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or other acquisition shall be
excluded from clause (c) (ii) of the preceding paragraph; (iii) the
defeasance, redemption, repurchase or other acquisition of subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness; (iv) the payment of any dividend by a Subsidiary of
the Company to the holders of its common Equity Interests on a pro rata basis;
(v) from and after April 1, 2001 the payment of dividends to Holdings the
proceeds of which are used to satisfy interest expense obligations of Holdings
under the Term Loan Facility, as in effect on the date of the Indenture;
provided that (x) no Default of Event of Default shall have occurred and be
continuing immediately before or immediately after such transaction and (y)
the aggregate amount of such payments does not exceed the sum of (1) $6.5
million and (2) the difference between (A) the Company's Cumulative
Consolidated Cash Flow from and after April 1, 2001 and (B) 1.75 times
Consolidated Interest Expense accrued on a cumulative basis from and after
April 1, 2001; (vi) the payment of dividends to Holdings the proceeds of which
are used to satisfy ordinary course administrative expenses of Holdings, but
in no event to exceed (together with all payments made pursuant to management
agreements) $2.0 million in any given fiscal year; (vii) the payment of any
dividend required pursuant to the Tax Sharing Agreement between the Company
and Holdings, as such became effective on the date of the Indenture and (viii)
other Investments in any Person (other than Holdings or an Affiliate of
Holdings that is not also a Subsidiary of the Company) having an aggregate
fair market value (measured on the date each such Investment was made and
without giving effect to subsequent changes in value), when taken together
with all other Investments made pursuant to this clause (viii) that are at the
time outstanding, not to exceed the greater of (x) $10.0 million and (y) 2.5%
of the Consolidated Tangible Net Worth of the Company at such time.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash
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Restricted Payment shall be determined by the Board of Directors whose
resolution with respect thereto shall be delivered to the Trustee, such
determination to be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if such
fair market value exceeds $5.0 million. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting
forth the basis upon which the calculations required by the covenant
"Restricted Payments" were computed, together with a copy of any fairness
opinion or appraisal required by the Indenture.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company will not issue any Disqualified Stock and
will not permit any of its Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company may incur Indebtedness (including
Acquired Debt) or issue shares of Disqualified Stock if the Company's Debt to
Cash Flow Ratio at the time of incurrence of such Indebtedness or the issuance
of such Disqualified Stock, after giving pro forma effect to such incurrence
or issuance as of such date and to the use of proceeds therefrom as if the
same had occurred at the beginning of the most recently ended Reference Period
of the Company for which internal financial statements are available, would
have been no greater than 4.0 to 1.0.
The Indenture also provides that the Company will not incur any Indebtedness
that is contractually subordinated in right of payment to any other
Indebtedness of the Company unless such Indebtedness is also contractually
subordinated in right of payment to the Notes on substantially identical
terms; provided, however, that no Indebtedness of the Company shall be deemed
to be contractually subordinated in right of payment to any other Indebtedness
of the Company solely by virtue of being unsecured.
The provisions of the first paragraph of this section will not apply to the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Company of Indebtedness (including letters of
credit, with letters of credit being deemed to have a principal amount
equal to the maximum potential liability of the Company and its
Subsidiaries thereunder) under Credit Facilities; provided that the
aggregate principal amount of all Indebtedness outstanding under all Credit
Facilities after giving effect to such incurrence does not exceed an amount
equal to the greater of (a) $100.0 million less the aggregate amount of all
Net Proceeds of Asset Sales applied to repay revolving credit Indebtedness
under a Credit Facility pursuant to the covenant described above under the
caption "--Asset Sales" other than Net Proceeds received pursuant to the
Satellite Lease Arrangements and (b) the Borrowing Base at the time of such
incurrence;
(ii) the incurrence by the Company and its Subsidiaries of the Existing
Indebtedness;
(iii) the incurrence by the Company of Indebtedness represented by the
Old Notes and the Exchange Notes and the guarantee by the Subsidiary
Guarantors thereof;
(iv) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or purchase money obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of the
Company or such Subsidiary, in an aggregate principal amount not to exceed
(subject to clause (x) below) $17.5 million at any time outstanding;
(v) the incurrence by the Company or any of its Subsidiaries of
Indebtedness in connection with the acquisition of assets or a new
Subsidiary; provided that such Indebtedness was incurred by the prior owner
of such assets or such Subsidiary prior to such acquisition by the Company
or one of its Subsidiaries and was not incurred in connection with, or in
contemplation of, such acquisition by the Company or one of it
Subsidiaries; and provided further that the principal amount (or accreted
value, as applicable) of such
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Indebtedness, together with any other outstanding Indebtedness incurred
pursuant to this clause (v), does not exceed (subject to clause (x) below)
$17.5 million;
(vi) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that is either Existing Indebtedness or was
permitted by the Indenture to be incurred under the first paragraph hereof
or clauses (iii), (iv), (v) or (vi) of this paragraph;
(vii) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Wholly Owned Subsidiaries; provided, however, that (i) if the Company is
the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations with
respect to the Notes and (ii)(A) any subsequent issuance or transfer of
Equity Interests that results in any such Indebtedness being held by a
Person other than the Company or a Subsidiary thereof and (B) any sale or
other transfer of any such Indebtedness to a Person that is not either the
Company or a Wholly Owned Subsidiary thereof shall be deemed, in each case,
to constitute an incurrence of such Indebtedness by the Company or such
Subsidiary, as the case may be, that was not permitted by this clause
(vii);
(viii) the incurrence by the Company of Hedging Obligations that are
incurred for the purpose of fixing or hedging interest rate risk with
respect to any floating rate Indebtedness that is permitted by the terms of
this Indenture to be outstanding;
(ix) the guarantee by the Company or any of the Subsidiary Guarantors of
Indebtedness of the Company or a Subsidiary of the Company that was
permitted to be incurred by another provision of this covenant;
(x) the incurrence by the Company or any Subsidiary Guarantor of Vendor
Financing Indebtedness in an aggregate principal amount (or accreted value,
as applicable) not to exceed $15.0 million outstanding at anytime; and
(xi) the incurrence by the Company of additional Indebtedness in an
aggregate principal amount (or accreted value, as applicable) at any time
outstanding not to exceed $17.5 million; provided that the total amount of
Indebtedness incurred by the Company pursuant to clauses (iv), (v) and (xi)
hereof does not, in the aggregate, exceed $35.0 million.
For purposes of determining compliance with this covenant, (a) in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xi) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify such item of Indebtedness and
will only be required to include the amount and type of such Indebtedness in
one of the above clauses, and (b) an item of Indebtedness may be divided and
classified in more than one of the types of Indebtedness described herein.
Accrual of interest, accretion or amortization of original issue discount, the
payment of interest on any Indebtedness in the form of additional Indebtedness
with the same terms, and the payment of dividends on Disqualified Stock in the
form of additional shares of the same class of Disqualified Stock will not be
deemed to be an incurrence of Indebtedness or an issuance of Disqualified
Stock for purposes of this covenant.
Maintenance of Insurance
The Indenture provides that the Company shall obtain or maintain (as
applicable) in full force and effect:
(i) in-orbit operations insurance with respect to each of MSAT-1 or MSAT-
2, at all times representing the value and prior insurance settlements of
such satellite (taking into account the foregone useful life of such
satellite) and the pro rata cost of a launch vehicle, payable in the event
that such satellite ceases to be used for commercial revenue producing
service (provided that such insurance may contain customary provisions for
deductible payments and minimum thresholds for satellite failure);
provided, however, that at the time the Company is required to procure or
renew in-orbit operations insurance with respect to MSAT-1 or MSAT-2, the
Company may reduce the amount to be insured by (x) the amount of cash, Cash
Equivalents and short-
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term investments (amounts allocated or expected to be allocated for capital
expenditures or working capital requirements), currently available to the
Company to construct a Replacement Satellite as determined in good faith by
the Board of Directors of the Company (evidenced by a resolution approved
by at least a majority of the Board of Directors of the Company and set
forth in an Officers' Certificate delivered to the Trustee), and (y) the
value of any long lead-time spare parts that the Company has procured to
date for any satellite that is comparable to the technological capability
of the MSAT-1 or MSAT-2 being insured, as such value is determined in good
faith by the Board of Directors of the Company (evidenced by a resolution
approved by at least a majority of the Board of Directors of the Company
and set forth in an Officers' Certificate delivered to the Trustee),
provided further that any insurance maintained by the Company will reflect
the rights of the lessee or purchaser under the terms of any Satellite
Lease Arrangements.
(ii) launch and in-orbit checkout insurance with respect to each
Replacement Satellite, which insurance shall be procured promptly prior to
the launch of each such satellite and shall be in effect on the launch date
and remain in effect through the launch and the initial check-out period of
such Replacement Satellite, in an amount sufficient to provide for the
construction, launch and insurance of a Replacement Satellite to be payable
in the event of a launch or satellite failure during the initial check-out
period; provided, however, that at the time the Company is required to
procure launch and in-orbit check-out insurance with respect to a
Replacement Satellite, the Company may reduce the amount to be insured if
another Replacement Satellite is fully operational, is being used in
commercial service and is insured in accordance with clause (i) above, by
(x) the amount of cash, cash equivalents and short-term investments
currently available to the Company to construct a Replacement Satellite as
determined in good faith by the Board of Directors of the Company
(evidenced by a resolution approved by at least a majority of the Board of
Directors of the Company and set forth in an Officers' Certificate
delivered to the Trustee), and (y) the value of any long lead-time spare
parts that the Company has procured to date for any satellite that is
comparable to the technological capability of the Replacement Satellite
being insured, as such value is determined in good faith by the Board of
Directors of the Company (evidenced by a resolution approved by at least a
majority of the Board of Directors of the Company and set forth in an
Officers' Certificate delivered to the Trustee).
The obligation of the Company to maintain insurance pursuant to this
covenant may be satisfied by any combination of:
(i) insurance commitments obtained from any recognized insurance
provider,
(ii) insurance commitments obtained from any entity other than an entity
referred to in clause (i) if the Board of Directors of the Company
determines in good faith (evidenced by a majority resolution of the Board
of Directors of the Company and set forth in an Officer's Certificate
delivered to the Trustee) that such entity is creditworthy and otherwise
capable of bearing the financial risk of providing such insurance and
making payments in respect of any claims on a timely basis; and
(iii) unrestricted cash segregated and maintained by the Company in a
segregated account established with an Eligible Institution (the "Insurance
Account") solely for disbursement in accordance with the terms of this
covenant ("Cash Insurance"), and to be held in trust for the sole and
express benefit of the holders of the Notes.
Within 30 days following any date on which the Company is required to obtain
insurance pursuant to the Indenture, the Company will deliver to the Trustee
an insurance certificate certifying the amount of insurance then carried, and
in full force and effect, and an Officer's Certificate stating that such
insurance, together with any other insurance or Cash Insurance maintained by
the Company, complies with the Indenture. In addition, the Company will cause
to be delivered to the Trustee no less than once each year an insurance
certificate setting forth the amount of insurance then carried, which
insurance certificate shall entitle the Trustee to:
(i) notice of any claim under any such insurance policy; and
(ii) at least 30 days' notice from the provider of such insurance prior
to the cancellation of any such insurance and an Officers' Certificate that
complies with the first sentence of this paragraph.
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In the event that the Company maintains any Cash Insurance in satisfaction
of any part of their obligation to maintain insurance pursuant to this
covenant, the Company shall deliver, in lieu of any insurance certificate
otherwise required by this covenant, an Officers' Certificate to the Trustee
certifying the amount of such Cash Insurance.
In the event that the Company receives any proceeds of any insurance that it
is required to maintain pursuant to this covenant, the Company shall promptly
deposit such proceeds into an escrow account established with an Eligible
Institution for such purpose. If the Company maintains any Cash Insurance in
satisfaction of any part of its obligation to maintain insurance pursuant to
this covenant, the Company shall transfer the cash maintained in the Insurance
Account to such escrow account upon the occurrence of the event (e.g. a launch
failure) that would have entitled the Company to the payment of insurance had
the Company purchased insurance from a recognized insurance provider. The
Company may use monies on deposit in such escrow account for the design,
development, construction, procurement, launch and insurance of any
Replacement Satellite if: (i) the Company delivers to the Trustee a
certificate of the Company's President certifying that such Replacement
Satellite is comparable to the technological capability of the satellite being
replaced, (ii) within 30 days following the receipt of such insurance
proceeds, the Company delivers to the Trustee an Officers' Certificate
certifying that (A) the Company will use its reasonable best efforts to ensure
that such Replacement Satellites are launched within 24 months following
delivery from the escrow account of such insurance proceeds; and (B) the
Company will have sufficient funds to service the Company's projected debt
service requirements until the scheduled launch of such Replacement Satellite
and to develop, construct, launch and insure such Replacement Satellite.
Liens
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or suffer
to exist any Liens on any asset now owned or hereafter acquired, or any income
or profits therefrom or assign or convey any right to receive income
therefrom, except Permitted Liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary to (i)(a) pay dividends or make any other
distributions to the Company or any of its Subsidiaries (1) on its Capital
Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness owed to the Company or
any of its Subsidiaries, (ii) make loans or advances to the Company or any of
its Subsidiaries or (iii) transfer any of its properties or assets to the
Company or any of its Subsidiaries. However, the foregoing restrictions will
not apply to encumbrances or restrictions existing under or by reason of (a)
Existing Indebtedness as in effect on the date of the Indenture, (b) the
Revolving Credit Facility as in effect as of the date of the Indenture, and
any amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof, provided that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacement or refinancings are no more restrictive, taken as a
whole, with respect to such dividend and other payment restrictions than those
contained in the Revolving Credit Facility as in effect on the date of the
Indenture, (c) the Indenture and the Notes, (d) applicable law, (e) any
instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of its Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in connection
with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person, or the property or assets of the Person, so
acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of the Indenture to be incurred, (f) customary non-
assignment provisions in leases entered into in the ordinary course of
business and consistent with past practices, (g) purchase money obligations
for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iii) above on the property so
acquired, (h) any agreement for the sale of a Subsidiary that restricts
distributions by that Subsidiary pending its sale, (i) Permitted Refinancing
Indebtedness,
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provided that the restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are no more restrictive, taken as a whole,
than those contained in the agreements governing the Indebtedness being
refinanced, (j) secured Indebtedness otherwise permitted to be incurred
pursuant to the provisions of the covenant described above under the caption
"--Liens" that limits the right of the debtor to dispose of the assets
securing such Indebtedness, (k) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements and other
similar agreements entered into in the ordinary course of business and
(l) restrictions on cash or other deposits or net worth imposed by customers
under contracts entered into in the ordinary course of business.
Merger, Consolidation, or Sale of Assets
The Indenture provides that the Company may not consolidate or merge with or
into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially
all of its properties or assets in one or more related transactions, to
another corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the entity or
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Unit Agreement, the Pledge Agreement, the
Debt Registration Rights Agreement, the Warrant Registration Rights Agreement
and the Notes and the Indenture pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default exists; and (iv) except in the case
of a merger of the Company with or into a Wholly Owned Subsidiary of the
Company, the Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made (A) will have a Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of the Company immediately
preceding the transaction and (B) will, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at
the beginning of the Reference Period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Debt to Cash Flow Ratio test set forth
in the first paragraph of the covenant described above under the caption "--
Incurrence of Indebtedness and Issuance of Preferred Stock."
Transactions with Affiliates
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such
Subsidiary with an unrelated Person and (ii) the Company delivers to the
Trustee (a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $1.0
million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause
(i) above and that such Affiliate Transaction has been approved by a majority
of the disinterested members of the Board of Directors and (b) with respect to
any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $10.0 million, an opinion as to
the fairness to the Holders of such Affiliate Transaction from a financial
point of view issued by an accounting, appraisal or investment banking firm of
national standing. Notwithstanding the foregoing, the following items shall
not be deemed to be Affiliate Transactions: (i) reasonable fees and
compensation paid to and indemnity provisions provided on behalf of officers,
directors or employees of the Company or any of its Subsidiaries in the
ordinary course of business, (ii) transactions between or among the Company
and its Subsidiaries, (iii) transactions pursuant to agreements in effect on
the Issue Date and amendments, modifications and
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replacements thereof, provided that such amendments, modifications and
replacements are on terms that are fair and reasonable to the Company and have
been unanimously approved by the disinterested members of the Board of
Directors, (iv) transactions between the Company and Holdings pursuant to the
Tax Sharing Agreement, as such is in effect on the date of the Indenture (or
as amended thereafter so long as no payment by the Company and its
Subsidiaries under any such amended Tax Sharing Agreement shall exceed the
amount of the payment that would have been permitted at such time under the
Tax Sharing Agreement as in effect on the Issue Date), and (v) Restricted
Payments (other than Restricted Investments) that are permitted by the
provisions of the Indenture described above under the caption "--Restricted
Payments."
Sale and Leaseback Transactions
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, enter into any sale and leaseback transaction; provided
that the Company may enter into a sale and leaseback transaction if (i) the
Company could have (a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction pursuant to
the Debt to Cash Flow Ratio test set forth in the first paragraph of the
covenant described above under the caption "--Incurrence of Additional
Indebtedness and Issuance of Preferred Stock" and (b) incurred a Lien to
secure such Indebtedness pursuant to the covenant described above under the
caption "--Liens," (ii) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the fair market value (as determined in good
faith by the Board of Directors and set forth in an Officers' Certificate
delivered to the Trustee) of the property that is the subject of such sale and
leaseback transaction and (iii) the transfer of assets in such sale and
leaseback transaction is permitted by, and the Company applies the proceeds of
such transaction in compliance with, the covenant described above under the
caption "--Repurchase at the Option of Holders--Asset Sales."
Additional Subsidiary Guarantees
The Indenture provides that if the Company or any of its Subsidiaries
acquires or creates another Subsidiary after the date of the Indenture, then
such newly acquired or created Subsidiary shall become a Subsidiary Guarantor
and execute a Supplemental Indenture and deliver an Officers' Certificate and
Opinion of Counsel and such other documents necessary and in accordance with
the terms of the Indenture.
Limitation on Issuances and Sales of Equity Interests in Wholly Owned
Subsidiaries
The Indenture provides that the Company (i) will not, and will not permit
any Wholly Owned Subsidiary of the Company to, transfer, convey, sell, lease
or otherwise dispose of any Equity Interests in any Wholly Owned Subsidiary of
the Company to any Person (other than the Company or a Wholly Owned Subsidiary
of the Company), unless (a) such transfer, conveyance, sale, lease or other
disposition is of all the Equity Interests in such Wholly Owned Subsidiary and
(b) the cash Net Proceeds from such transfer, conveyance, sale, lease or other
disposition are applied in accordance with the covenant described above under
the caption "--Repurchase at the Option of Holders--Asset Sales," and (ii)
will not permit any Wholly Owned Subsidiary of the Company to issue any of its
Equity Interests (other than, if necessary, shares of its Capital Stock
constituting directors' qualifying shares) to any Person other than to the
Company or a Wholly Owned Subsidiary of the Company.
Business Activities
The Company will not, and will not permit any Subsidiary to, engage in any
business other than Permitted Businesses, except to such extent as would not
be material to the Company and its Subsidiaries taken as a whole.
Payments for Consent
The Indenture provides that neither the Company nor any of its Subsidiaries
will, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any Holder of any Notes for
or as an inducement to any consent, waiver or amendment of any of the terms or
provisions of the Indenture
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or the Notes unless such consideration is offered to be paid or is paid to all
Holders of the Notes that consent, waive or agree to amend in the time frame
set forth in the solicitation documents relating to such consent, waiver or
agreement.
Reports
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the
Company will furnish to the Trustee and the Holders of Notes (i) all quarterly
and annual financial information that would be required to be contained in a
filing with the Commission on Forms 10-Q and 10-K if the Company were required
to file such Forms, including a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed
with the Commission on Form 8-K if the Company were required to file such
reports, in each case within the time periods specified in the Commission's
rules and regulations. For so long as Holdings is a guarantor of the Notes,
the Indenture permits the Company to satisfy its obligations in this covenant
with respect to financial information relating to the Company by furnishing
financial information relating to Holdings; provided that the same is
accompanied by consolidated financial information of the Company on a stand-
alone basis that explains in reasonable detail the differences between the
information relating to Holdings, on the one hand, and the information
relating to the Company on a stand-alone basis, on the other hand. In
addition, following the consummation of the Exchange Offer, whether or not
required by the rules and regulations of the Commission, the Company will file
a copy of all such information and reports with the Commission for public
availability within the time periods specified in the Commission's rules and
regulations (unless the Commission will not accept such a filing) and make
such information reasonably available to securities analysts and prospective
investors upon request. In addition, Holdings, the Company and the Subsidiary
Guarantors have agreed that, for so long as any Notes remain outstanding, they
will furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes (ii) default in payment when due
of the principal of or premium, if any, on the Notes (iii) failure by the
Company or any of its Subsidiaries to comply with the provisions described
under the captions "--Repurchase at the Option of Holders--Change of Control,"
"--Asset Sales," "--Certain Covenants--Restricted Payments" or "--Incurrence
of Indebtedness and Issuance of Preferred Stock"; (iv) failure by the Company
or any of its Subsidiaries for 60 days after notice to comply with any of its
other agreements in the Indenture or the Notes; (v) default under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness for money borrowed by the
Company or any of its Subsidiaries (or the payment of which is guaranteed by
the Company or any of its Subsidiaries) whether such Indebtedness or guarantee
now exists, or is created after the date of the Indenture, which default (a)
is caused by a failure to pay principal of or premium, if any, or interest on
such Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (b) results
in the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$5.0 million or more; (vi) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by Holdings (or the payment of which is
guaranteed by Holdings) whether such Indebtedness or guarantee now exists, or
is created after the date of the Indenture, which default is (a) a Payment
Default or (b) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $5.0 million or more; (vii) failure
by Holdings to pay final judgments aggregating in
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excess of $5.0 million, which judgments are not paid, discharged or stayed for
a period of 60 days; (viii) failure by the Company or any of its Subsidiaries
to pay final judgments aggregating in excess of $5.0 million, which judgments
are not paid, discharged or stayed for a period of 60 days; (ix) material
breach by Holdings, the Company or any Subsidiary of any representation or
warranty set forth in the Unit Agreement or the Pledge Agreement, or material
default by Holdings, the Company or any Subsidiary in the performance of any
covenant set forth in the Unit Agreement or the Pledge Agreement, or
repudiation by Holdings, the Company or any Subsidiary of its obligations
under the Unit Agreement or the Pledge Agreement or the unenforceability of
the Unit Agreement or the Pledge Agreement against Holdings, the Company or
any Subsidiary for any reason; (x) certain events of bankruptcy or insolvency
with respect to the Company or any Guarantor; (xi) the termination or
revocation of any of the permits, licenses, approvals, orders, certificates,
franchises or authorizations of governmental or regulatory authorities,
including those relating to the Federal Communications Act of 1934, as
amended, owned or held by Holdings, the Company or any of the Subsidiary
Guarantors that are material to the Company and its Subsidiaries, taken as a
whole, (collectively, "Licenses") or any other material impairment occurs
under any such Licenses of the rights of the holder of such License; and (xii)
except as permitted by the Indenture, any of the Holdings Guarantee or the
Subsidiary Guarantees shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any of the Holdings Guarantee or the Subsidiary Guarantees, or any
Person acing on behalf of Holdings or any of the Subsidiary Guarantors, shall
deny or disaffirm its obligations under its guarantee.
If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Notes may declare
all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute
a Significant Subsidiary, all outstanding Notes will become due and payable
without further action or notice. Holders of the Notes may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have
had to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to
April 1, 2003, by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to April 1, 2003, then the
premium specified in the Indenture shall also become immediately due and
payable to the extent permitted by law upon the acceleration of the Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Notes, the Indenture or the Pledge Agreement or for any claim
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based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance
of the Notes. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that such a
waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of, premium, if any, and interest
and Liquidated Damages on such Notes when such payments are due from the trust
referred to below, (ii) the Company's obligations with respect to the Notes
concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or agency for
payment and money for security payments held in trust, (iii) the rights,
powers, trusts, duties and immunities of the Trustee, and the Company's
obligations in connection therewith and (iv) the Legal Defeasance provisions
of the Indenture. In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company released with respect to certain
covenants that are described in the Indenture ("Covenant Defeasance") and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient,
in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest and
Liquidated Damages on the outstanding Notes on the stated maturity or on the
applicable redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date; (ii) in the case of Legal Defeasance, the Company shall have delivered
to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that (A) the Company has received from,
or there has been published by, the Internal Revenue Service a ruling or (B)
since the date of the Indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based thereon
such opinion of counsel shall confirm that, the Holders of the outstanding
Notes will not recognize income, gain or loss for federal income tax purposes
as a result of such Legal Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred; (iii) in the case of
Covenant Defeasance, the Company shall have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Covenant Defeasance had not occurred; (iv) no Default or Event of
Default shall have occurred and be continuing on the date of such deposit
(other than a Default or Event of Default resulting from the borrowing of
funds to be applied to such deposit) or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period
ending on the 91st day after the date of deposit; (v) such Legal Defeasance or
Covenant Defeasance will not result in a breach or violation of, or constitute
a default under any material agreement or instrument (other than the
Indenture) to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound; (vi) the Company must
have delivered to the Trustee an opinion of counsel to the effect that after
the 91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally; (vii) the Company must deliver to
the Trustee an Officers' Certificate stating that the deposit was not made by
the Company with the intent of preferring the Holders of Notes over the other
creditors of the Company with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others; and (viii) the Company
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must deliver to the Trustee an Officers' Certificate and an opinion of
counsel, each stating that all conditions precedent provided for relating to
the Legal Defeasance or the Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note
selected for redemption. Also, the Company is not required to transfer or
exchange any Note for a period of 15 days before a selection of Notes to be
redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed
maturity of any Note or alter the provisions with respect to the redemption of
the Notes (other than provisions relating to the covenants described above
under the caption "--Repurchase at the Option of Holders"), (iii) reduce the
rate of or change the time for payment of interest on any Note, (iv) waive a
Default or Event of Default in the payment of principal of or premium, if any,
or interest on the Notes (except a rescission of acceleration of the Notes by
the Holders of at least a majority in aggregate principal amount of the Notes
and a waiver of the payment default that resulted from such acceleration), (v)
make any Note payable in money other than that stated in the Notes, (vi) make
any change in the provisions of the Indenture relating to waivers of past
Defaults or the rights of Holders of Notes to receive payments of principal of
or premium or Liquidated Damages, if any, or interest on the Notes, (vii)
waive a redemption payment with respect to any Note (other than a payment
required by one of the covenants described above under the caption "--
Repurchase at the Option of Holders") (viii) release any Guarantee other than
in accordance with the Indenture or (ix) make any change in the foregoing
amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or the Notes
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's obligations to Holders of Notes in the case of a
merger or consolidation or sale of all or substantially all of the Company's
assets, to make any change that would provide any additional rights or
benefits to the Holders of Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with requirements
of the Commission in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage
in other transactions; however, if it acquires any conflicting interest it
must eliminate such conflict within 90 days or apply to the Commission for
permission to continue or resign.
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The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the
Indenture at the request of any Holder of Notes, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"ACTEL Agreement" means the agreement between Holdings and African
Continental Telecommunications Ltd., dated as of December 4, 1997, pursuant to
which Holdings will lease its MSAT-2 satellite to African Continental
Telecommunications Ltd., as such agreement is in effect on the date of the
Indenture.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales of inventory in the ordinary course of business
consistent with past practices (provided that the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole will be governed by the provisions of the
Indenture described above under the caption "--Change of Control" and/or the
provisions described above under the caption "--Merger, Consolidation or Sale
of Assets" and not by the provisions of the Asset Sale covenant), and (ii) the
issue or sale by the Company or any of its Subsidiaries of Equity Interests of
any of the Company's Subsidiaries, in the case of either clause (i) or (ii),
whether in a single transaction or a series of related transactions (a) that
have a fair market value in excess of $1.0 million or (b) for net proceeds in
excess of $1.0 million. Notwithstanding the foregoing, the following items
shall not be deemed to be Asset Sales: (i) a transfer of assets by the Company
to a Wholly Owned Subsidiary or by a Wholly Owned Subsidiary to the Company or
to another Wholly Owned Subsidiary, (ii) an issuance of Equity Interests by a
Wholly Owned Subsidiary to the Company or to another Wholly Owned Subsidiary,
and (iii) a Restricted Payment that is permitted by the covenant described
above under the caption "--Restricted Payments."
"Attributable Debt" in respect of a sale and leaseback transaction means, at
the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
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"Borrowing Base" means, as of any date, an amount equal to 85% of the face
amount of all accounts receivable owned by the Company and its Subsidiaries as
of such date that are not more than 90 days past due calculated on a
consolidated basis and in accordance with GAAP. To the extent that information
is not available as to the amount of accounts receivable or trade payables as
of a specific date, the Company may utilize the most recent available
information for purposes of calculating the Borrowing Base.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in support thereof) having maturities of not
more than six months from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of six months or less
from the date of acquisition, bankers' acceptances with maturities not
exceeding six months and overnight bank deposits, in each case with any
domestic commercial bank having capital and surplus in excess of $500 million
and a Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Corporation and in each case maturing
within six months after the date of acquisition and (vi) money market funds
the assets of which constitute Cash Equivalents of the kinds described in
clauses (i)-(v) of this definition.
"Communications Asset" means a terrestrial or satellite antenna, licensed
site, base station, communications ground segment, network operations center
or other telecommunications facility (other than a satellite) that is used or
useful in a Permitted Business.
"Consolidated Annualized Cash Flow" means, with respect to any Person for
any period, the product of (x) the Consolidated Cash Flow of such Person for
the most recently completed fiscal quarter for which internal financial
statements are available, times (y) four.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with
an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent
that such provision for taxes was included in computing such Consolidated Net
Income, plus (iii) consolidated interest expense of such Person and its
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated Net
Income, plus (iv) depreciation, amortization (including amortization of
goodwill and other intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period) and other non-cash expenses
(excluding any such non-cash expense to the extent that it represents an
accrual of or reserve for cash expenses in any future period or amortization
of a prepaid cash expense that was paid in a prior period) of such Person and
its Subsidiaries for such period to the extent
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that such depreciation, amortization and other non-cash expenses were deducted
in computing such Consolidated Net Income, minus (v) non-cash items increasing
such Consolidated Net Income for such period, in each case, on a consolidated
basis and determined in accordance with GAAP. Notwithstanding the foregoing,
the provision for taxes on the income or profits of, and the depreciation and
amortization and other non-cash expenses of, a Subsidiary of the referent
Person shall be added to Consolidated Net Income to compute Consolidated Cash
Flow only to the extent that a corresponding amount would be permitted at the
date of determination to be dividended to the Company by such Subsidiary
without prior governmental approval (that has not been obtained), and without
direct or indirect restriction pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Indebtedness" means, with respect to any Person as of any date
of determination, the sum, without duplication, of (i) the total amount of
Indebtedness of such Person and its Subsidiaries, plus (ii) the total amount
of Indebtedness of any other Person, to the extent that such Indebtedness has
been Guaranteed by the referent Person or one or more of its Subsidiaries,
plus (iii) the aggregate liquidation value of all Disqualified Stock of such
Person and all preferred stock of Subsidiaries of such Person, in each case,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of (i) the consolidated interest expense of such Person and
its Subsidiaries for such period, whether paid or accrued (including, without
limitation, amortization or original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations) and (ii) the consolidated interest expense of such Person and its
Subsidiaries that was capitalized during such period, and (iii) any interest
expense on Indebtedness of another Person that is guaranteed by such Person or
one of its Subsidiaries or secured by a Lien on assets of such Person or one
of its Subsidiaries (whether or not such Guarantee or Lien is called upon) and
(iv) the product of (a) all dividend payments on any series of preferred stock
of such Person or any of its Subsidiaries, times (b) a fraction, the numerator
of which is one and the denominator of which is one minus the then current
combined federal, state and local statutory tax rate of such Person, expressed
as a decimal, in each case, on a consolidated basis and in accordance with
GAAP.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP; provided
that (i) the Net Income (but not loss) of any Person that is not a Subsidiary
or that is accounted for by the equity method of accounting shall be included
only to the extent of the amount of dividends or distributions paid in cash to
the referent Person or a Wholly Owned Subsidiary thereof that is a Subsidiary
Guarantor, (ii) the Net Income of any Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar distributions
by that Subsidiary of that Net Income is not at the date of determination
permitted without any prior governmental approval (that has not been obtained)
or, directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its stockholders, (iii) the Net
Income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded and (iv) the
cumulative effect of a change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date
with respect to any series of preferred stock (other than Disqualified Stock)
that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less
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(x) all write-ups (other than write-ups resulting from foreign currency
translations and write-ups of tangible assets of a going concern business made
within 12 months after the acquisition of such business) subsequent to the
date of the Indenture in the book value of any asset owned by such Person or a
consolidated Subsidiary of such Person, (y) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except,
in each case, Permitted Investments), and (z) all unamortized debt discount
and expense and unamortized deferred charges as of such date, all of the
foregoing determined in accordance with GAAP.
"Consolidated Tangible Net Worth" of any Person at any time means the
Consolidated Net Worth of such Person at such time less goodwill and any other
intangible assets reflected on the consolidated balance sheet of such Person
at such time.
"Credit Facilities" means, with respect to the Company, one or more debt
facilities (including, without limitation, the Revolving Credit Facility) or
commercial paper facilities with banks or other institutional lenders
providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special
purpose entities formed to borrow from such lenders against such receivables)
or letters of credit, in each case, as amended, restated, modified, renewed,
refunded, replaced or refinanced in whole or in part from time to time.
Indebtedness under Credit Facilities outstanding on the date on which Notes
are first issued and authenticated under the Indenture shall be deemed to have
been incurred on such date in reliance on the exception provided by clause (i)
of the definition of Permitted Debt.
"Cumulative Consolidated Cash Flow" means the aggregate Consolidated Cash
Flow of a Person from a particular point in time.
"Debt to Cash Flow Ratio" means, with respect to any Person as of any date
of determination (the "Calculation Date") the ratio of (a) the Consolidated
Indebtedness of the Company as of such date to (b) the Consolidated Annualized
Cash Flow of the Company for the most recent full fiscal Reference Period
ending immediately prior to such date for which internal financial statements
are available, determined on a pro forma basis after giving effect to all
acquisitions or dispositions of assets made by the Company and its
Subsidiaries from the beginning of such Reference Period through and including
such date of determination (including any related financing transactions) as
if such acquisitions and dispositions had occurred at the beginning of such
quarter. In addition, for purposes of making the computation referred to
above, (i) acquisitions that have been made by the Company or any of its
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the reference period or subsequent to
such reference period and on or prior to the Calculation Date shall be deemed
to have occurred on the first day of the reference period and Consolidated
Cash Flow for such reference period shall be calculated without giving effect
to clause (iii) of the proviso set forth in the definition of Consolidated Net
Income, and (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses disposed of prior to the Calculation Date, shall be excluded.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature; provided, however, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company to repurchase such Capital Stock upon the occurrence of a
Change of Control or an Asset Sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that the Company may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with the covenant described above under the caption "--
Certain Covenants--Restricted Payments."
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"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means (i) an offering of common stock of the Company or a
capital contribution to the Company's common equity of the net cash proceeds
of a public offering of Holdings or (ii) one or more Strategic Equity
Investments (other than in connection with a Change of Control).
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Revolving Credit Facility) in
existence on the date of the Indenture, until such amounts are repaid.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced
by bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all Indebtedness of others
secured by a Lien on any asset of such Person (whether or not such
Indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other
Person. The amount of any Indebtedness outstanding as of any date shall be (i)
the accreted value thereof, in the case of any Indebtedness issued with
original issue discount, and (ii) the principal amount thereof, together with
any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Subsidiary of the Company sells or otherwise disposes of
any Equity Interests of any direct or indirect Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such Person is no
longer a Subsidiary of the Company, the Company shall be deemed to have made
an Investment on the date of any such sale or disposition equal to the fair
market value of the Equity Interests of such Subsidiary not sold or disposed
of in an amount determined as provided in the final paragraph of the covenant
described above under the caption "--Restricted Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the
nature thereof,
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any option or other agreement to sell or give a security interest in and any
filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction).
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but
not loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b)
the disposition of any securities by such Person or any of its Subsidiaries or
the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash and Cash Equivalent proceeds
received by the Company or any of its Subsidiaries in respect of any Asset
Sale (including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied
to the repayment of Indebtedness secured by a Lien on the asset or assets that
were the subject of such Asset Sale and any reserve for adjustment in respect
of the sale price of such asset or assets established in accordance with GAAP.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Business" means the business of the Company on the date of the
Indenture and businesses reasonably related or incidental thereto.
"Permitted Investments" means (a) any Investment in the Company or in a
Wholly Owned Subsidiary of the Company that is a Subsidiary Guarantor (b) any
Investment in Cash Equivalents; (c) any Investment by the Company or any
Subsidiary of the Company in a Person, if as a result of such Investment (i)
such Person becomes a Wholly Owned Subsidiary of the Company and a Subsidiary
Guarantor or (ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Wholly Owned Subsidiary of the Company that
is a Subsidiary Guarantor; (d) any Investment made as a result of the receipt
of non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "--Repurchase
at the Option of Holders--Asset Sales"; and (e) any acquisition of assets
solely in exchange for the issuance of Equity Interests (other than
Disqualified Stock) of the Company.
"Permitted Liens" means (i) Liens in favor of the Company; (ii) Liens on
property of a Person existing at the time such Person is merged into or
consolidated with the Company or any Subsidiary of the Company; provided that
such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Company; (iii) Liens on property existing
at the time of acquisition thereof by the Company or any Subsidiary of the
Company, provided that such Liens were in existence prior to the contemplation
of such acquisition; (iv) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other obligations of
a like nature incurred in the ordinary course of business; (v) Liens to secure
Indebtedness (including Capital Lease Obligations) permitted by clause (iv) or
clause (x) of the second paragraph of the covenant entitled "Incurrence of
Indebtedness and Issuance of Preferred Stock" covering only the assets
acquired with such Indebtedness; (vi) Liens existing on the date of the
Indenture; (vii) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good faith
by appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be required
in conformity with GAAP shall have been made therefor; and (viii) Liens
incurred in the ordinary course of
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business of the Company or any Subsidiary of the Company with respect to
obligations that do not exceed $5.0 million at any one time outstanding and
that (a) are not incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than trade credit in the ordinary
course of business) and (b) do not in the aggregate materially detract from
the value of the property or materially impair the use thereof in the
operation of business by the Company or such Subsidiary.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Subsidiaries (other than
intercompany Indebtedness); provided that: (i) the principal amount (or
accreted value, if applicable) of such Permitted Refinancing Indebtedness does
not exceed the principal amount of (or accreted value, if applicable), plus
accrued interest on, the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses
incurred in connection therewith); (ii) such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and has a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, limited liability company, joint
stock company, trust, unincorporated organization, government or any agency or
political subdivision thereof or any other entity.
"Pledge Agreement" means the Pledge and Escrow Agreement among the Company
and the Trustee, dated the date of the Indenture and as amended from time to
time.
"Reference Period" means the most recently ended full fiscal quarter.
"Replacement Satellite" means any satellite constructed to replace MSAT-1 or
MSAT-2 in the event of a failure of such MSAT-1 or MSAT-2.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Revolving Credit Facility" means that certain Revolving Credit Facility,
dated as of March 31, 1998, by and among the Company and Morgan Guaranty Trust
Company of New York, Toronto Dominion Bank, Bank of America National Trust and
Savings Association and certain other lenders (collectively, the "Banks"),
providing for up to $100.0 million of revolving credit borrowings, including
any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
modified, renewed, refunded, replaced or refinanced from time to time.
"Satellite Lease Arrangements" means the sale or lease of the Company's
MSAT-2 satellite pursuant to the ACTEL Agreement or a replacement agreement
(an "MSAT-2 Lease Agreement") provided that any such replacement agreement
shall be on commercially reasonable terms, provided that (A) the consideration
received by the Company in respect at such sale or lease (x) consists solely
of cash and (y) constitutes fair market value (as determined by the Board of
Directors of the Company set forth in resolution thereof delivered to the
Company, which determination shall be based upon an opinion or appraisal
issued by an appraisal or investment banking firm of national standing); (B)
the Company shall have acquired (through purchase or lease) capacity on MSAT-1
or a reasonable substitute thereof either (x) pursuant to the TMI Lease
Agreement or (y) any other agreement with a term not less than the maximum
term of the MSAT-2 Lease Agreement then in effect and otherwise on
commercially reasonable terms if (in the case of this clause (y)) in the
opinion of a nationally
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recognized independent expert (a) the capacity acquired pursuant to such
replacement agreement is sufficient to permit the Company to conduct an
operations as conducted and as contemplated to be conducted through the term
of the MSAT-2 Lease Agreement then in effect and (y) the total consideration
paid by the Company for such replacement satellite capacity is no greater than
the fair market value thereof.
"Separation Date" means that earlier of (i) 180 days from the date of
issuance, (ii) such date as the Initial Purchasers may, in their discretion,
deem appropriate, (iii) in the event a Change of Control occurs, the date that
the Company mails notice thereof to holders of the Notes, (iv) the
commencement of the Exchange Offer and (v) the effectiveness of the shelf
registration statement relating to the Notes.
"Shareholder Guarantors" means Hughes, Singapore Telecom and Baron Capital
Partners, L.P.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date of
the Indenture.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the
date originally scheduled for the payment thereof.
"Strategic Equity Investment" means an investment in Capital Stock (other
than Disqualified Stock) of the Company or Holdings in an aggregate amount of
not less than $50.0 million.
"Strategic Investor" means a Person engaged in one or more Permitted
Businesses that has, or is a Wholly-Owned Subsidiary of a Person that has, an
equity market capitalization in excess of $1.0 billion.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more Subsidiaries of such Person (or any combination
thereof).
"Term Loan Facility" means that certain Credit Agreement, dated as of March
31, 1998, by and among Holdings and the Banks, providing for up to $100.0
million of borrowings, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, modified, renewed, refunded, replaced or refinanced from
time to time.
"Unit Agreement" means the Unit Agreement among the Company, Holdings and
the Trustee, dated the Issue Date and as amended from time to time.
"Vendor Financing Indebtedness" means Indebtedness of the Company or a
Subsidiary Guarantor the proceeds of which are utilized solely to acquire
ground-based Communications Assets used or usable in a Permitted Business of
the Company or such Subsidiary Guarantor.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will
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elapse between such date and the making of such payment, by (ii) the then
outstanding principal amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth below, the Exchange Notes will be issued in the form of
one or more Global Notes (the "Global Notes"). The Global Notes will be
deposited on the date of the closing of the sale of the Notes offered hereby
(the "Closing Date") with the Trustee as custodian for The Depository Trust
Company ("DTC"), in New York, New York, and registered in the name of DTC or
its nominee, in each case for credit to an account of a direct or indirect
participant in DTC as described below.
Exchange Notes that are issued as described below under "--Certified
Securities" will be issued in registered form (the "Certificated Securities").
Except as set forth below, the Global Notes may be transferred, in whole and
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for
Exchange Notes in certificated form except in the limited circumstances
described below. See "--Exchange of Book-Entry Securities for Certificated
Securities." Except in the limited circumstances described below, owners of
beneficial interests in the Global Notes will not be entitled to receive
physical delivery of Certificated Securities (as defined below).
Initially, the Trustee will act as Paying Agent and Registrar with respect
to the Exchange Notes. The Exchange Notes may be presented for registration of
transfer and exchange at the offices of the Registrar.
DEPOSITORY PROCEDURES
The following description of the operations and procedures of DTC, Euroclear
and Cedel are provided solely as a matter of convenience. These operations and
procedures are solely within the control of the respective settlement systems
and are subject to changes by them from time to time. The Company takes no
responsibility for these operations and procedures and urges investors to
contact the system or their participants directly to discuss these matters.
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between Participants through electronic book-
entry changes in accounts of its Participants. The Participants include
securities brokers and dealers (including the Initial Purchasers), banks,
trust companies, clearing corporations and certain other organizations. Access
to DTC's system is also available to other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may
beneficially own securities held by or on behalf of DTC only through the
Participants or the Indirect Participants. The ownership interests in, and
transfers of ownership interests in, each security held by or on behalf of DTC
are recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Company that, pursuant to procedures established by
it, (i) upon deposit of the Global Notes, DTC will credit the accounts of
Participants designated by the Initial Purchasers with portions of the
principal amount of the Global Notes and (ii) ownership of the Notes evidenced
by the Global Notes will be shown on, and the transfer of ownership thereof
will be effected only through, records maintained by DTC (with respect to the
Participants) or by the Participants and the Indirect Participants (with
respect to other owners of beneficial interest in the Global Notes).
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Investors in the Global Notes may hold their interests therein directly
through DTC, if they are Participants in such system, or indirectly through
organizations (including Euroclear and Cedel) which are Participants in such
system. Euroclear and Cedel will hold interests in the Global Notes on behalf
of their participants through customers' securities accounts in their
respective names on the books of their respective depositories, which are
Morgan Guaranty Trust Company of New York, Brussels office, as operator of
Euroclear, and Citibank, N.A., as operator of Cedel. All interests in Global
Notes, including those held through Euroclear or Cedel, may be subject to the
procedures and requirements of DTC. Those interests held through Euroclear or
Cedel may also be subject to the procedures and requirements of such systems.
The laws of some states require that certain persons take physical delivery in
definitive form of securities that they own. Consequently, the ability to
transfer beneficial interests in Global Notes to such persons will be limited
to that extent. Because DTC can act only on behalf of Participants, which in
turn act on behalf of Indirect Participants and certain banks, the ability of
a person having beneficial interests in a Global Note to pledge such interests
to persons or entities that do not participate in the DTC system, or otherwise
take actions in respect of such interests, may be affected by the lack of a
physical certificate evidencing such interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTEREST IN THE GLOBAL NOTES WILL NOT
HAVE EXCHANGE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL
DELIVERY OF EXCHANGE NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE
REGISTERED OWNERS OR "HOLDERS" THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal of, and premium, if any, Liquidated
Damages, if any, and interest on a Global Note registered in the name of DTC
or its nominee will be payable to DTC in its capacity as the registered Holder
under the Indenture. Under the terms of the Unit Agreement and the Indenture,
the Company and the Trustee will treat the persons in whose names the Exchange
Notes, including the Global Notes, are registered as the owners thereof for
the purpose of receiving such payments and for any and all other purposes
whatsoever. Consequently, neither the Company nor the Trustee nor any agent of
the Company or the Trustee has or will have any responsibility or liability
for (i) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interest in the Global Notes, or for maintaining, supervising or
reviewing any of DTC's records or any Participant's or Indirect Participant's
records relating to the beneficial ownership interests in the Global Notes or
(ii) any other matter relating to the actions and practices of DTC or any of
its Participants or Indirect Participants. DTC has advised the Company that
its current practice, upon receipt of any payment in respect of securities, is
to credit the accounts of the relevant Participants with the payment on the
payment date, in amounts proportionate to their respective holdings in the
principal amount of beneficial interest in the relevant security as shown on
the records of DTC unless DTC has reason to believe it will not receive
payment on such payment date. Payments by the Participants and the Indirect
Participants to the beneficial owners of Exchange Notes will be governed by
standing instructions and customary practices and will be the responsibility
of the Participants or the Indirect Participants and will not be the
responsibility of DTC, the Trustee, the or the Company. Neither the Company
nor the Trustee will be liable for any delay by DTC or any of its Participants
in identifying the beneficial owners of the Exchange Notes, and the Company
and the Trustee may be, may conclusively rely on and will be protected in
relying on instructions from DTC or its nominee for all purposes.
Except for trades involving only Euroclear and Cedel participants, interest
in the Global Notes are expected to be eligible to trade in DTC's Same-Day
Funds Settlement System and secondary market trading activity in such
interests will, therefore, settle in immediately available funds, subject in
all cases to the rules and procedures of DTC and its Participants. See "--Same
Day Settlement and Payment."
Cross-market transfers between the Participants in DTC, on the one hand, and
Euroclear or Cedel participants, on the other hand, will be effected through
DTC in accordance with DTC's rules on behalf of Euroclear or Cedel, as the
case may be, by its respective depositary; however, such cross-market
transactions will require delivery of instructions to Euroclear or Cedel, as
the case may be, by the counterparty in such system in accordance with the
rules and procedures and within the established deadlines (Brussels time) of
such system. Euroclear or Cedel, as the case may be, will, if the transaction
meets its settlement requirements, deliver
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instructions to its respective depositary to take action to effect final
settlement on its behalf by delivering or receiving interests in the relevant
Global Note in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Euroclear
participants and Cedel participants may not deliver instructions directly to
the depositories for Euroclear or Cedel.
DTC has advised the Company that it will take any action permitted to be
taken by a Holder of Exchange Notes only at the direction of one or more
Participants to whose account DTC has credited the interests in the Global
Notes and only in respect of such portion of the amount of the Exchange Notes
as to which such Participant or Participants has or have given such direction.
However, if there is an Event of Default under the Notes, DTC reserves the
right to exchange the Global Notes for legended Notes in certificated form,
and to distribute such Notes to its Participants.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures to
facilitate transfers of interests in the Global Notes among Participants in
DTC, Euroclear and Cedel, they are under no obligation to perform or to
continue to perform such procedures, and such procedures may be discontinued
at any time. Neither the Company nor the Trustee nor any of their respective
agents will have any responsibility for the performance by DTC, Euroclear or
Cedel or their respective participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
Exchange of Book-Entry Securities for Certificated Securities
A Global Note is exchangeable for definitive Exchange Notes in registered
certificated form ("Certificated Notes") if (i) DTC (x) notifies the Company
that it is unwilling or unable to continue as depositary for the Global Notes
and the Company thereupon fails to appoint a successor depositary or (y) has
ceased to be a clearing agency registered under the Exchange Act, (ii) the
Company, at its option, notifies the Trustee in writing that it elects to
cause the issuance of the Certificated Securities or (iii) there shall have
occurred and be continuing a Default or Event of Default with respect to the
Notes. In addition, beneficial interests in Global Notes may be exchanged for
Certificated Securities upon request but only upon prior written notice given
to the Trustee by or on behalf of DTC in accordance with the Indenture. In all
cases, Certificated Securities delivered in exchange for any Global Notes or
beneficial interests therein will be registered in the names, and issued in
any approved denominations, requested by or on behalf of the depositary (in
accordance with its customary procedures).
Same Day Settlement and Payment
The Indenture requires that payments in respect of the Notes represented by
the Global Notes (including principal, premium, if any, interest and
Liquidated Damages, if any) be made by wire transfer of immediately available
funds to the accounts specified by the Global Note Holder. With respect to
Certificated Securities, the Company will make all payments of principal,
premium, if any, interest and Liquidated Damages, if any, by wire transfer of
immediately available funds to the accounts specified by the Holders thereof
or, if no such account is specified, by mailing a check to each such Holder's
registered address. The Notes represented by the Global Notes are expected to
be eligible to trade in the PORTAL market and to trade in the Depositary's
Same-Day Funds Settlement System, and any permitted secondary market trading
activity in such Notes will, therefore, be required by the Depositary to be
settled in immediately available funds. The Company expects that secondary
trading in any Certificated Securities will also be settled in immediately
available funds.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a Global Note from a Participant
in DTC will be credited, and any such crediting will be reported to the
relevant Euroclear or Cedel participant, during the securities settlement
processing day (which must be a business day for Euroclear and Cedel)
immediately following the settlement date of DTC. DTC has advised the Company
that cash received in Euroclear or Cedel as a result of sales of interests in
a Global Note by or through a Euroclear or Cedel participant to a Participant
in DTC will be received with value on the settlement date of DTC but will be
available in the relevant Euroclear or Cedel cash account only as of the
business day for Euroclear or Cedel following DTC's settlement date.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following general discussion summarizes certain of the principal
material United States federal income tax consequences of the exchange of Old
Notes for Exchange Notes and of the ownership and disposition of the Exchange
Notes. Old Notes and Exchange Notes are discussed collectively below as
"Notes." This discussion is a summary for general information only and does
not consider all aspects of United States federal income taxation that may be
relevant to an investor in light of that investor's particular circumstances.
This discussion also deals only with Old Notes and Exchange Notes held by a
holder as capital assets within the meaning of Section 1221 of the United
States Internal Revenue Code of 1986, as amended to the date hereof (the
"Code"). This summary does not address all of the tax consequences that may be
relevant nor does it address the federal income tax consequences to holders
subject to special treatment under the federal income tax laws, such as
brokers or dealers in securities or currencies, certain securities traders,
tax-exempt entities, banks, thrifts, insurance companies, other financial
institutions, persons that hold the Notes as a position in a "straddle" or as
part of a "synthetic security," "hedging," "conversion" or other integrated
instrument, persons that have a "functional currency" other than the United
States dollar, investors in pass-through entities and certain United States
expatriates. Further, this summary does not address (i) the income tax
consequences to shareholders in or partners or beneficiaries of, a holder of
the Notes (ii) the United States federal alternative minimum tax consequences
of the purchase, ownership or disposition of the Notes, or (iii) any state,
local or foreign tax consequences of the purchase, ownership or disposition of
the Notes.
This discussion is based upon the Code, existing and proposed regulations
thereunder, and current administrative rulings and court decisions. All of the
foregoing are subject to change, possibly on a retroactive basis, and any such
change could affect the continuing validity of this discussion.
HOLDERS AND PURCHASERS OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE APPLICATION OF FEDERAL INCOME TAXES LAWS, AS WELL AS THE LAWS
OF ANY STATE, LOCAL, OR FOREIGN TAXING JURISDICTION, TO THEIR PARTICULAR
SITUATIONS.
UNITED STATES HOLDERS
For purposes of this discussion, "United States Holder" generally means (i)
a citizen or resident (as defined in 7701(b)(1) of the Code) of the United
States, (ii) a corporation or partnership created or organized under the laws
of the United States or any political subdivision thereof, (iii) an estate the
income of which is includible in its gross income for United States federal
income tax purposes without regard to its source, or (iv) a trust if a court
within the United States is able to exercise primary supervision over its
administration and one or more United States persons have the authority to
control all substantial decisions of the trust. Certain United States federal
income consequences relevant to a holder other than a United States Holder (a
"Non-U.S. Holder") are discussed separately below.
Exchange of Notes
The exchange of the Old Notes for the Exchange Notes pursuant to the
Exchange Offer should not be a taxable event to the holder and thus the holder
should not recognize any taxable gain or loss as a result of the exchange. A
holder's adjusted tax basis in the Exchange Notes will be the same as his
adjusted tax basis in the Old Notes exchange therefor, his holding period for
the Old Notes will be included in his holding period for the Exchange Notes
and the issue price and adjusted issue price of the Old Notes will be the
issue price and adjusted issue price of the Exchange Notes.
Payments of Interest
Stated interest paid or accrued on the Notes will constitute qualified
stated interest and will be taxable to a United States Holder as ordinary
income in accordance with the holder's method of accounting for federal income
tax purposes. Alternatively, a United States Holder may elect to include
stated interest on the Notes (as well as original issue discount ("OID"),
market discount and de minimis market discount on the Notes, as
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adjusted by any amortizable bond premium or acquisition premium) in gross
income on a constant-yield basis. The mechanics and implications of such an
election are beyond the scope of this discussion and, as a result, United
States Holders should consult their own tax advisors regarding the
desirability of making such an election.
Original Issue Discount
The Company has determined that the Notes were issued with OID for United
States federal income tax purposes. The amount of OID on a Note equals the
excess of the principal amount due at maturity on the Note over its "issue
price." The Company has determined that the portion of the purchase price
originally paid for each Unit that was properly allocable to each Note and,
thus, the "issue price" of each $1,000 principal amount Old Note, was [ ].
Although this allocation is not binding on the IRS, each United States holder
is bound by the Company's allocation, unless a disclosure statement is
attached to the timely filed United States federal income tax return of the
United States Holder for its taxable year in which it acquired the Note.
Each United States Holder (whether reporting on the cash or accrual basis of
accounting for tax purposes) will be required to include in taxable income the
daily portion of the OID that accrues on a Note for each day during the
taxable year on which such United States Holder holds the Note, in advance of
the receipt of the cash to which such OID is attributable. The daily portion
is determined by allocating to each day of an accrual period a pro rata
portion of the OID allocable to such accrual period. A United States Holder
may use accrual periods of any length from one day to one year to compute
accruals of OID, provided each scheduled payment of principal or interest
occurs either on the first day or last day of an accrual period. The amount of
OID allocable to an accrual period equals the excess of (i) the product of the
"adjusted issue price" of the Note at the beginning of the accrual period and
the Note's "yield to maturity" (which "yield to maturity" is adjusted to take
into account the length of the accrual period), over (ii) the amount of any
stated interest payments allocable to such accrual period. The "yield to
maturity" of the Notes is the discount rate that, when applied to all payments
due under the Notes (including stated interest payments), results in a present
value equal to the issue price of the Notes. The "adjusted issue price" of a
Note at the beginning of an accrual period will equal its issue price,
increased by the aggregate amount of OID that has accrued on the Note in all
prior accrual periods, and decreased by any principal payments made on the
Note during all prior accrual periods.
If the Company is required to pay Liquidated Damages with respect to the
Notes as described under "Description of the Exchange Notes--Registration
Rights; Liquidated Damages," such payment would result in ordinary income to
United States Holder. Although not free from doubt, the Company intends to
treat any such payments as additional interest payable on the Notes. If such
treatment is respected, the Notes would be treated as reissued for OID
purposes, and the payments may affect the calculation of OID.
Premium
A United States Holder that purchases a Note at a price greater than the
Note's principal amount will not be required to include any OID in income. The
excess of the United States Holder's basis in a Note over its principal amount
generally is treated as amortizable bond premium. A United States Holder may
elect to deduct such amortizable bond premium (with a corresponding reduction
in the holder's tax basis) over the remaining term of the Note (or a shorter
period to the first call date, if a smaller deduction would result) on an
economic accrual basis. The election would apply to all taxable debt
instruments held by the United States Holder at any time during the first
taxable year to which the election applies and to any such debt instruments
that are later acquired by the United States Holder. The election may not be
revoked without the consent of the IRS.
A United States Holder that purchases a Note at a price in excess of the
Note's adjusted issue price but less than the Note's principal amount has
acquisition premium with respect to the Note equal to such excess. The amount
of OID the United States Holder must include in income each year with respect
to the Note is reduced by the portion of acquisition premium allocated to such
year. United States Holders generally allocate acquisition premium to each
accrual of OID on a pro rata basis, so that each accrual of OID is reduced by
a constant fraction.
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Market Discount
If a United States Holder purchases a Note for an amount that is less than
its adjusted issue price, the amount of the difference will be treated as
market discount for U.S. federal income tax purposes, unless such difference
is less than a specified de minimis amount. Under the market discount rules, a
United States Holder must accrue market discount on a straight-line basis, or
may elect to accrue it on an economic accrual basis. Absent the election
described in the next paragraph, a United States Holder will not include
market discount in income as it accrues. A United States Holder will be
required to treat any principal payment on, or any amount received on the
sale, exchange, retirement or other disposition of, a Note as ordinary income
to the extent of accrued market discount which has not previously been
included in income.
In addition, the United States Holder may be required to defer, until the
maturity of the Note or its earlier disposition in a taxable transaction, the
deduction of a portion of the interest expense of any indebtedness incurred or
continued to purchase or carry such a Note. A United States Holder of a Note
acquired at a market discount may elect to include market discount in income
as interest as it accrues, in which case the interest deferral rule described
in the prior sentence would not apply. This election would apply to all bonds
with market discount acquired by the electing United States Holder on or after
the first day of the taxable year to which the election applies and is
separate from the election concerning the rate of accrual described above. The
election may be revoked only with the consent of the IRS.
Sale or Redemption of the Notes
Upon the disposition of a Note by sale, exchange or redemption, a United
States Holder generally will recognize gain or loss equal to the difference,
if any, between (i) the amount realized on the disposition (other than amounts
attributable to accrued and unpaid interest) and (ii) the United States
Holder's tax basis in the Note. A United States Holder's tax basis in a Note
generally will equal the cost of the Note to the United States Holder,
increased by OID previously included (or currently includible) in such
holder's gross income to the date of disposition, and reduced by any payments
other than payments of qualified stated interest made on such Note. When a
Note is sold, disposed of or redeemed between Interest Payment Dates, the
portion of the amount realized on the disposition that is attributable to
interest accrued to the date of sale must be reported as interest income by a
cash method investor and an accrual method investor that has not included the
interest in income as it accrued.
Assuming the Note is held as a capital asset, such gain or loss will
generally constitute capital gain or loss and will be long-term capital gain
or loss if the United States Holder has held such Note for longer than one
year. Federal income tax rates on long-term capital gain received by
individuals vary based on the individual's income and the holding period for
the asset. In particular, different maximum tax rates apply to gains
recognized by an individual from the sale of (i) assets held for more than one
year but no more than 18 months and (ii) assets held for more than 18 months.
Holders should contact their tax advisors for more information or for the
capital gains tax rate applicable to particular sale of Notes.
NON-U.S. HOLDERS
The following discussion summarizes certain United States federal income tax
consequences relevant to a Non-U.S. Holder of a Note.
This discussion does not deal with all aspects of United States federal
income taxation that may be relevant to any particular Non-U.S. Holder in
light of that holder's personal circumstances with respect to such holder's
purchase, ownership or disposition of the Notes, including such holder holding
the Notes through a partnership. For example, persons who are partners in
foreign partnerships and beneficiaries of foreign trusts or estates who are
subject to United States federal income tax because of their own status, such
as United States residents or foreign persons engaged in a trade or business
in the United States, may be subject to United States federal income tax even
though the entity is not subject to such tax.
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Stated Interest and OID on the Notes
Under current United States federal income tax law, payments of stated
interest or OID on a Note by the Company or any paying agent to a holder that
is a Non-U.S. Holder will not be subject to withholding of United States
federal income tax if (i) such payment is effectively connected with a trade
or business within the United States by such Non-U.S. Holder, or (ii) both (a)
the holder does not actually or constructively own 10 percent or more of the
combined voting power of all classes of stock of the Company and is not a
controlled foreign corporation related to the Company through stock ownership
and (b) the beneficial owner provides a statement signed under penalties of
perjury that includes its name and address and certifies (on an IRS Form W-8
or a substantially similar substitute form) that it is a Non-U.S. Person in
compliance with applicable requirements.
Interest on a Note that is effectively connected with the conduct of a trade
or business in the United States by a Non-U.S. Holder, although exempt from
the withholding tax (assuming appropriate certification is provided), may be
subject to graduated United States federal income tax on a net income basis
and also an additional branch profits tax at 30% (or a lower rate provided in
an applicable treaty) as if such amounts were earned by a United States
Holder.
Sale or Redemption of Notes
Except as described below and subject to the discussion concerning backup
withholding, a Non-U.S. Holder generally will not be subject to withholding of
United States federal income tax with respect to any gain realized upon the
sale or redemption of Notes. Further, a Non-U.S. Holder generally will not be
subject to United States federal income tax with respect to any such gain
unless (i) the gain is effectively connected with a United States trade or
business of such Non-U.S. Person, (ii) subject to certain exceptions, the Non-
U.S. Holder is an individual who holds such Notes as a capital asset and is
present in the United States for 183 days or more in the taxable year of the
disposition, or (iii) the Non-U.S. Holder is subject to tax pursuant to the
provisions of United States tax law applicable to certain United States
expatriates.
INFORMATION REPORTING
In general, information reporting requirements will apply to payments made
on, and proceeds from the sale of, Notes held by a noncorporate United States
Holder within the United States. In addition, payments made on, and payments
of proceeds from the sale of such Notes, to a Non-U.S. Holder made to or
through the United States office of a broker are subject to information
reporting unless the holder thereof certifies as to its non-U.S. status or
otherwise establishes an exemption from information reporting and backup
withholding. See "Backup Withholding."
Backup Withholding
Payments made on, and proceeds from the sale of, the Notes, Warrants and
Common Stock acquired on the exercise of a Warrant may be subject to a
"backup" withholding tax of 31% unless the holder complies with certain
identification or exemption requirements. Any amounts so withheld will be
allowed as a credit against the holder's income tax liability, or refunded,
provided the required information is provided to the IRS.
New Regulations Relating to Withholding and Information Reporting for Non-
U.S. Holders
In October 1997, the IRS issued final regulations relating to withholding,
backup withholding and information reporting with respect to payments made to
Non-U.S. Holders, and in March 1998 the IRS announced a delay in their
effective date. The regulations generally apply to payments made after
December 31, 1999. However, withholding certificates that are valid under the
present rules on December 31, 1999, remain valid until the earlier of December
31, 2000 or the expiration date of the certificate under the present rules
(unless otherwise invalidated due to changes in the circumstances of the
person whose name is on the certificate).
When effective, the new regulations will streamline and, in some cases,
alter the types of statements and information that must be furnished to claim
a reduced rate of withholding. While various IRS forms (such as
124
<PAGE>
IRS Forms 1001 and 4224) currently are used to claim exemption from withholding
or a reduced withholding rate, the preamble to the regulations states that the
IRS intends most certifications to be made on revised Form W-8. The regulations
also clarify the duties of United States payors making payments to foreign
persons and modify the rules concerning withholding on payments made to Non-
U.S. Holders through foreign intermediaries. With some exceptions, the new
regulations treat a payment to a foreign partnership as a payment directly to
the partners.
125
<PAGE>
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange Notes for its own
account in connection with the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes.
This Prospectus, as it may be amended or supplemented from time to time, may
be used by Participating Broker-Dealers during the period referred to below in
connection with resales of Exchange Notes received in exchange for Old Notes
where such Old Notes were acquired by such Participating Broker-Dealers for
their own accounts as a result of market-making activities or other trading
activities (other than a resale of an unsold allotment from the original sale
of Old Notes). The Company has agreed that this Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such Exchange Notes for a period
ending one year after the Expiration Date. Such notice may be given in the
space provided for that purpose in the Letter of Transmittal or may be
delivered to the Exchange Agent at one of the addresses set forth in the
Letter of Transmittal. See "The Exchange Offer--Resales of Exchange Notes."
The Company will not receive any proceeds from the issuance of the Exchange
Notes offered hereby. Exchange Notes received by Participating Broker-Dealers
for their own accounts in connection with the Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes
or a combination of such methods of resale, at market prices prevailing at the
time of resale, at prices related to such prevailing market prices or at
negotiated prices. Any such resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such broker-dealer and/or the purchasers
of any such Exchange Notes. Any Participating Broker-Dealer that resells
Exchange Notes that were received by it for its own account in connection with
the Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Notes may be deemed to be an "underwriter"
within the meaning of the Securities Act, and any profit on any such resale of
Exchange Notes and any commissions or concessions received by any such persons
may be deemed to be underwriting compensation under the Securities Act. The
Letter of Transmittal states that by acknowledging that it will deliver and by
delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
For a period ending one year after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Participating Broker-Dealer that requests
such documents in the Letter of Transmittal.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by Arnold & Porter, Washington, District of Columbia.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements of American Mobile Satellite
Corporation as of December 31, 1996 and 1997 and for each of the three years
in the period ended December 31, 1997, incorporated by reference into this
Prospectus, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
giving such reports. The combined financial statements of ARDIS Holding
Company as of December 31, 1996 and 1997 and for each of the years in the
three years then ended, incorporated by reference into this Prospectus, have
been audited by KPMG Peat Marwick LLP, independent accountants, as stated in
their report.
126
<PAGE>
AVAILABLE INFORMATION
The Company and Holdings have filed with the Commission a Registration
Statement on Form S-4 (the "Exchange Offer Registration Statement," which term
shall encompass all amendments, exhibits and schedules thereto) pursuant to
the Securities Act, and the rules and regulations promulgated thereunder,
covering the Exchange Notes being offered hereby. This Prospectus does not
contain all of the information set forth in the Exchange Offer Registration
Statement. For further information with respect to the Company and the
Exchange Offer, reference is made to the Exchange Offer Registration
Statement. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily
complete. With respect to each such contract, agreement or other document
filed as an exhibit to the Exchange Offer Registration Statement, reference is
made to the exhibit for a more complete description of the document or matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference.
Holdings is subject to the informational requirements of the Exchange Act,
and in accordance therewith, Holdings files reports and other information with
the Commission. Such reports, proxy statements and other information filed by
Holdings can be inspected and copied at the Commission's public reference room
located at 450 Fifth Street, N.W., Washington, D.C. 20549, and the
Commission's regional offices located at: 7 World Trade Center (13th floor),
New York, New York 10006 and Northwest Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained
at prescribed rates by writing to the SEC, Public Reference Section,
Washington, D.C. 20549. Copies of documents filed by Holdings with the
Commission may also be accessed electronically by means of the Commission's
home page on the Internet at "http://www.sec.gov."
Holdings will furnish periodic reports to the Trustee, which will make them
available upon request to the holders of the Notes.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Holdings hereby incorporates by reference in this Prospectus the following
documents, which have been filed with the Commission pursuant to the Exchange
Act: (i) Holdings' Annual Report on Form 10-K for the year ended December 31,
1997 and Form 10-K/A for the year ended December 31, 1997, filed Jaunary 13,
1998; (ii) Holdings' Quarterly Report on Form 10-Q for the quarter ended March
31, 1998; and (iii) Holdings' Current Reports on Form 8-K dated as of January
5, 1998, January 22, 1998, March 9, 1998 and April 15, 1998 and on Form 8-K/A
filed January 13, 1998.
In addition, all documents filed by Holdings with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof
and prior to the termination of the Exchange Offer shall be deemed to be
incorporated herein by reference and to be a part hereof from the respective
dates of the filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THE COMPANY AND HOLDINGS UNDERTAKE TO PROVIDE A
COPY OF EACH SUCH DOCUMENT, WITHOUT CHARGE, TO EACH PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM A PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL
REQUEST TO RANDY S. SEGAL, VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY, AMSC
ACQUISITION COMPANY, INC., 10802 PARKRIDGE BLVD., RESTON, VIRGINIA 20191-5416,
TELEPHONE (703) 758-6130. IN ORDER TO ENSURE EARLY DELIVERY OF THE DOCUMENTS,
ANY REQUEST SHOULD BE MADE BY , 1998.
127
<PAGE>
INDEX TO PRO FORMA FINANCIAL STATEMENTS OF HOLDINGS
<TABLE>
<S> <C>
Description of Pro Forma Financial Statements of Holdings................. P-2
Pro Forma Consolidated Statement of Operations for the three months ended
March 31, 1998 (unaudited)............................................... P-3
Pro Forma Consolidated Statement of Operations for the three months ended
March 31, 1997 (unaudited)............................................... P-4
Pro Forma Consolidated Statement of Operations for the year ended December
31, 1997 (unaudited)..................................................... P-5
Notes to Pro Forma Financial Statements................................... P-6
</TABLE>
P-1
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The accompanying pro forma financial information gives effect to (i) the
Acquisition, (ii) the Offering and (iii) the New Bank Financing as if such
transactions had been consummated on January 1 of each of the periods
presented in the case of the Unaudited Pro Forma Condensed Statement of
Operations of Holdings. The pro forma condensed financial information is
presented for illustrative purposes only and is not necessarily indicative of
what Holdings' actual financial position and results of operations would have
been had the above-referenced transactions been consummated as of the above-
referenced dates or of the financial position or results of operations that
may be reported by Holdings in the future.
The following data should be read in conjunction with Holdings' Consolidated
Financial Statements and related notes and ARDIS' Combined Financial
Statements and related notes incorporated by reference elsewhere within this
document.
P-2
<PAGE>
HOLDINGS
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
-----------------------------------------------------------------
PRO FORMA ADJUSTMENTS
---------------------------- PRO FORMA
HOLDINGS ARDIS ACQUISITION OFFERING CONSOLIDATED
-------- ------- ------------ ---------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenues:
Services.............. $ 6,418 $ 9,541 $ (139)(1) $ 15,820
Equipment and
consulting........... 3,604 530 4,134
-------- ------- --------
Total revenue....... 10,022 10,071 19,954
Cost of service and
operations............. 7,728 7,795 (139)(1) 15,384
Cost of equipment sold.. 3,881 581 4,462
Sales and advertising... 3,022 1,562 4,584
General and
administrative......... 3,631 1,487 5,118
Depreciation and
amortization........... 10,163 3,291 (324)(2) 13,975
-------- ------- --------
845 (3)
Operating loss.......... (18,403) (4,645) (23,569)
Interest and other
income (expense)....... (201) 5 125 (4) 1,413 (5) 1,342
Interest expense........ (6,638) (282) (9,702)(6) (16,622)
-------- ------- --------
Net loss before income
tax benefit............ (25,242) (4,922) (38,849)
Income tax benefit...... -- 1,702 (1,702)(7) --
-------- ------- --------
Net loss................ $(25,242) $(3,220) $(38,849)
======== ======= ========
Loss per share of Common
Stock.................. $ (1.00) $ (1.23)
======== ========
Weighted-average common
shares outstanding
during the period
(000's)................ 25,241 6,262 (8) 31,503
======== ========== ========
</TABLE>
See Notes to Pro Forma Financial Information on following pages.
P-3
<PAGE>
HOLDINGS
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997
----------------------------------------------------------
PRO FORMA
ADJUSTMENTS
---------------------- PRO FORMA
HOLDINGS ARDIS ACQUISITION OFFERING CONSOLIDATED
-------- ------- ----------- -------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Services.............. $ 4,153 $10,598 $ (97)(1) $ 14,654
Equipment and
consulting........... 4,532 327 4,859
-------- ------- --------
Total revenue....... 8,685 10,925 19,513
Cost of service and
operations............. 8,873 7,179 (97)(1) 15,955
Cost of equipment sold.. 5,442 466 5,908
Sales and advertising... 3,221 1,528 4,749
General and
administrative......... 4,868 1,105 5,973
Depreciation and
amortization........... 9,937 3,580 (324)(2) 14,038
-------- ------- --------
845 (3)
Operating loss.......... (23,656) (2,933) (27,110)
Interest and other
income................. 945 34 125 (4) 1,413 (5) 2,517
Interest expense........ (4,370) (362) (11,932)(6) (16,664)
-------- ------- --------
Net loss before income
tax benefit............ (27,081) (3,261) (41,257)
Income tax benefit...... -- 1,141 (1,141)(7) --
-------- ------- --------
Net loss................ $(27,081) $(2,120) $(41,257)
======== ======= ========
Loss per share of Common
Stock.................. ($1.08) $ (1.32)
======== ========
Weighted-average common
shares outstanding
during the
period (000's)......... 25,109 6,262 (8) 31,371
======== ====== ========
</TABLE>
See Notes to Pro Forma Financial Information on following pages.
P-4
<PAGE>
HOLDINGS
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
------------------------------------------------------------------
PRO FORMA ADJUSTMENTS
--------------------------- PRO FORMA
HOLDINGS ARDIS ACQUISITION OFFERING CONSOLIDATED
--------- -------- ------------ ---------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Services.............. $ 20,684 $ 41,923 $ (498)(1) $ 62,109
Equipment and
consulting........... 23,530 2,326 25,856
--------- -------- ---------
Total revenue....... 44,214 44,249 87,965
Cost of service and
operations............. 31,959 31,940 (498)(1) 63,401
Cost of equipment sold.. 40,335 2,233 42,568
Sales and advertising... 12,066 5,888 17,954
General and
administrative......... 14,819 6,970 21,789
Depreciation and
amortization........... 42,430 14,586 (1,297)(2) 59,099
--------- -------- ---------
3,380 (3)
Operating loss.......... (97,395) (17,368) (116,846)
Interest and other
(expense) income ...... (179) 150 500 (4) 5,208 (5) 5,679
Interest expense........ (21,633) (1,331) (42,076)(6) (65,040)
--------- -------- ---------
Net loss before income
tax benefit............ (119,207) (18,549) (176,207)
Income tax benefit...... -- 6,807 (6,807)(7) --
--------- -------- ---------
Net loss................ $(119,207) $(11,742) $(176,207)
========= ======== =========
Loss per share of Common
Stock.................. $ (4.74) $ (5.61)
========= =========
Weighted-average common
shares outstanding
during the
period (000's)......... 25,131 6,262 (8) 31,393
========= ========== =========
</TABLE>
See Notes to Pro Forma Financial Information on following pages.
P-5
<PAGE>
NOTES TO PRO FORMA FINANCIAL INFORMATION
The pro forma financial information is based on the following assumptions
and adjustments:
(1) Reflects the elimination of revenues and related operating expenses on
transactions between American Mobile and ARDIS.
(2) Reflects the elimination of goodwill amortization recorded by ARDIS.
(3) Reflects the amortization, over a 20-year life, of the excess of purchase
price of ARDIS over fair market value of assets acquired.
(4) Reflects interest earned on funds escrowed in connection with the UPS
Guarantee at an average interest rate of 5.0%.
(5) Reflects interest income earned on the Pledged Securities at an average
interest rate of 5.0%.
(6) Reflects adjustments to interest expense as follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
-----------------
YEAR ENDED
DECEMBER 31, 1997 1997 1998
----------------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
(a)Adjustment of interest expense and debt
costs on New Bank Financing.......... $(10,547) $(2,076) $(3,268)
(b)Interest expense on the Notes and
amortization of debt discount........ 41,887 10,471 10,471
(c)Amortization of Note issuance costs.... 1,225 306 306
(d)Amortization of Guarantee Warrants .... 3,544 1,740 702
(e)Amortization of pre-funded interest.... 5,967 1,491 1,491
--------- -------- --------
$ 42,076 $ 11,932 $ 9,702
========= ======== ========
</TABLE>
The assumptions in connection with the above pro forma interest expense
adjustments are as follows:
(a) Reflects (i) an increase of 25 basis points in the interest rate of the
New Bank Financing relative to the Bank Financing and (ii) the
elimination of interest expense applicable to the Bank Financing and
vendor financing which is to be partially repaid with the proceeds from
the sale of the Units.
(b) Reflects interest expense on the Notes at 12 1/4% and amortization of
the $8.5 million debt discount.
(c) Reflects the amortization, over a ten year period, of debt issuance
costs of approximately $12.2 million associated with the Offering and
the New Bank Financing.
(d) Reflects the amortization, over a five year period, of the Guarantee
Warrants related to the New Bank Financing.
(e) Reflects the amortization, over a three year period, of pre-funded
interest of $17.9 million on the Term Loan Facility.
(7) Reflects the elimination of a tax sharing arrangement between ARDIS and
Motorola.
(8) Reflects shares issued to Motorola in connection with the Acquisition.
P-6
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES OTHER THAN THE EXCHANGE NOTES
OFFERED HEREBY OR AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY THE
EXCHANGE NOTES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UN-
LAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT ANY INFOR-
MATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 18
Use of Proceeds.......................................................... 29
Capitalization........................................................... 29
Selected Financial and Other Data........................................ 30
Pro Forma Financial Information.......................................... 34
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 39
Business................................................................. 50
Regulation............................................................... 65
Management............................................................... 72
Management Compensation.................................................. 75
Security Ownership....................................................... 78
Certain Relationships and Related Party Transactions..................... 80
Description of New Bank Financing........................................ 82
Description of Motorola Vendor Financing................................. 83
The Exchange Offer....................................................... 83
Description of the Exchange Notes........................................ 91
Certain United States Federal Income Tax Consequences.................... 121
Plan of Distribution..................................................... 126
Legal Matters............................................................ 126
Independent Accountants.................................................. 126
Available Information.................................................... 127
Incorporation of Certain Documents by Reference.......................... 127
Index to Pro Forma Financial Statements of Holdings...................... P-1
</TABLE>
LOGO
$335,000,000
AMERICAN MOBILE SATELLITE CORPORATION AMSC ACQUISITION COMPANY, INC.
OFFER TO EXCHANGE
12 1/4% SENIOR NOTES DUE 2008 (SERIES B) OF
AMSC ACQUISITION COMPANY, INC.
FOR ANY AND ALL OUTSTANDING 12 1/4% SENIOR NOTES DUE 2008 (SERIES A)
-----------------------
PROSPECTUS
-----------------------
[ ], 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Each of the Company's and Holdings' Bylaws provide that the Company and
Holdings will indemnify its directors and officers to the fullest extent
permitted by Delaware law. The Company and Holdings may be required to advance
litigation expenses in the case of stockholder derivative actions or other
actions, against an undertaking by the indemnified party to repay such advances
if it is ultimately determined that the indemnified party is not entitled to
indemnification.
In addition, each of the Company's and Holdings' Certificate of
Incorporation provides that, pursuant to Delaware law, its directors shall not
be liable for monetary damages for breach of the directors' fiduciary duty of
care to the corporation and its stockholders. This provision in the Certificate
of Incorporation does not eliminate the duty of care, and in appropriate
circumstances equitable remedies such as injunctive or other forms of
nonmonetary relief will remain available under Delaware law. In addition, each
director will continue to be subject to liability for breach of the director's
duty of loyalty to the Company or Holdings, for acts or omissions not in good
faith or involving intentional misconduct, for knowing violations of law, for
actions leading to improper personal benefit to the director, and for payment of
dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws.
Holdings also has entered into separate indemnification agreements with
its officers and directors. These agreements would require Holdings to, among
other things, indemnify its officers and directors against certain liabilities
that may arise by reason of their status or service as officers and directors
(other than liabilities arising from willful misconduct of a culpable nature),
to advance their expenses incurred as a result of any proceeding against them as
to which they could be indemnified and to obtain officers' and directors'
insurance if available on reasonable terms.
Holdings has obtained an insurance policy covering officers and directors
under which the insurer agrees to pay on behalf of Holdings, subject to certain
exclusions, including certain violations of securities law, any claim made
against its officers and directors for a wrongful act that they may become
legally obligated to pay or for which the corporation is required to indemnify
its officers or directors. The policy has limits of $40,000,000 in the
aggregate, including SEC related events, subject to deductibles of $100,000 for
non SEC related events and $300,000 for SEC related events. Each of the Company
and Holdings believes that its Certificate of Incorporation and Bylaw
<PAGE>
provisions, indemnification agreements and insurance policies, as the case may
be, are necessary to attract and retain qualified persons as officers and
directors.
At present, there is no pending litigation or proceeding involving an
officer or director of either the Company or Holdings as to which
indemnification is being sought, nor is either of the Company or Holdings aware
of any threatened litigation that may result in claims for indemnification by
any officer or director.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit Description
- ------- -----------
2.1 Stock Purchase Agreement, by and among the Company, Motorola,
Motorola ARDIS Acquisition, Inc., Motorola ARDIS, Inc. and AMSC,
dated as of December 31, 1997 (incorporated by reference herein from
Exhibit 10.65 to Holdings' Annual Report on Form 10-K for the year
ending December 31, 1997).
2.2 Amendment No. 1 to Stock Purchase Agreement, by and among the
Company, Motorola, Motorola ARDIS Acquisition, Inc., Motorola ARDIS,
Inc. and AMSC, dated as of March 31, 1998 (incorporated by reference
herein from Exhibit 4.2 to the Schedule 13D dated March 31, 1998
filed by Motorola, Inc.).
4.1 Indenture dated March 31, 1998 between the Company and State Street
Bank and Trust Company (filed herewith).
4.2 Pledge Security Agreement dated March 31, 1998 by and among the
Company and State Street Bank and Trust Company (as Trustee and as
Collateral Agent) (filed herewith).
4.3 Debt Registration Rights Agreement dated March 31, 1998 by and among
the Company, Holdings, American Mobile Satellite Sales Corporation,
AMSC Sales Corporation, Ltd., AMSC Subsidiary Corporation, ARDIS
Company, Motorola ARDIS Acquisition, Inc., ARDIS Holding Company,
Radio Data Network Holding Corporation, Bear, Stearns & Co. Inc.,
J.P. Morgan Securities Inc., TD Securities (USA) Inc., and
BancAmerica Robertson Stephens (filed herewith).
4.4 Warrant Agreement dated March 31, 1998 between Holdings and State
Street Bank and Trust Company (filed herewith).
4.5 Warrant Registration Rights Agreement dated March 31, 1998 by and
among Holdings, Bear, Stearns & Co. Inc., J.P. Morgan Securities
Inc., TD Securities (USA) Inc., and BancAmerica Robertson Stephens
(including form of Warrant Certificate) (filed herewith).
4.6 Unit Agreement, dated March 31, 1998 by and among the Company,
Holdings and State Street Bank and Trust Company (filed herewith).
5.1 Opinion of Arnold & Porter.*
8.1 Tax Opinion of Arnold & Porter.*
II-2
<PAGE>
23.1 Consent of The Strategis Group (filed herewith).
23.2 Consent of Arthur Andersen LLP (filed herewith).
23.3 Consent of KPMG Peat Marwick LLP (filed herewith).
23.4 Consent of Arnold & Porter (included in Exhibit 5.1 and Exhbit 8.1,
respectively*).
24.1 Powers of Attorney of directors and officers of the Company (included
as part of signature page).
25.1 Statement of Eligibility of Trustee on Form T-1 (filed herewith).
99.1 Form of Letter of Transmittal (filed herewith).
99.2 Form of Notice of Guaranteed Delivery (filed herewith).
99.3 Form of Tender Instructions (filed herewith).
__________
*to be filed by amendment.
ITEM 22. UNDERTAKINGS
The undersigned Registrants hereby undertake:
(A)
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933 (the "Securities Act").
(b) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) ((S) 230.424(b) of this chapter) if, in the
aggregate, the changes in volume and price represent no more
than 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement.
II-3
<PAGE>
(c) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(B) That, for purposes of determining any liability under the Securities Act,
each filing of the registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(C) That, insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provision described under Item 20
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
(D) To respond to requests for information that is incorporated by reference
into the Prospectus pursuant to Item 4, 10(b), 11, or 13 of this form,
within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
II-4
<PAGE>
(E) To supply by means of a post-effective amendment all information concerning
a transaction, and the company being acquired involved therein, that was
not the subject of and included in the registration statement when it
became effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of Fairfax, Commonwealth
of Virginia, on May 13, 1998.
AMERICAN MOBILE SATELLITE CORPORATION
By: /s/ Randy S. Segal
-----------------------------------
Name: Randy S. Segal
Title: Vice President, General
Counsel and Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Gary M. Parsons and Randy S. Segal, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any and all post-effective amendments to this registration
statement, and to file the same, with exhibits thereto, and other documents in
connection therewith with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all and
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or either of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Gary M. Parsons Chairman of the Board May 13, 1998
- ----------------------------- of Directors and Chief
Gary M. Parsons Executive Officer
(Principal Executive Officer)
II-6
<PAGE>
/s/ Steven D. Peck Vice President and Chief May 13, 1998
- ------------------------------ Financial Officer
Stephen D. Peck (Principal Financial and
Accounting Officer)
/s/ Jack A. Shaw Director May 13, 1998
- ------------------------------
Jack A. Shaw
/s/ Douglas I. Brandon Director May 13, 1998
- ------------------------------
Douglas I. Brandon
/s/ Steven D. Dorfman Director May 13, 1998
- ------------------------------
Steven D. Dorfman
/s/ Ho Siaw Hong Director May 13, 1998
- ------------------------------
Ho Siaw Hong
/s/ Billy J. Parrott Director May 13, 1998
- ------------------------------
Billy J. Parrott
/s/ Andrew A. Quartner Director May 13, 1998
- ------------------------------
Andrew A. Quartner
/s/ Roderick M. Sherwood III Director May 13, 1998
- ------------------------------
Roderick M. Sherwood, III
/s/ Michael T. Smith Director May 13, 1998
- ------------------------------
Michael T. Smith
/s/ Yap Chee Keong Director May 13, 1998
- ------------------------------
Yap Chee Keong
/s/ Albert L. Zesiger Director May 13, 1998
- ------------------------------
Albert L. Zesiger
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of Fairfax, Commonwealth
of Virginia, on May 13, 1998.
AMSC ACQUISITION COMPANY, INC.
By: /s/ Randy S. Segal
-----------------------------
Name: Randy S. Segal
Title: Vice President, General
Counsel and Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Gary M. Parsons and Randy S. Segal, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any and all post-effective amendments to this registration
statement, and to file the same, with exhibits thereto, and other documents in
connection therewith with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all and
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or either of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Jack A. Shaw Chairman of the Board May 13, 1998
- ---------------------------- of Directors
Jack A. Shaw
/s/ Gary M. Parsons Chief Executive Officer May 13, 1998
- ---------------------------- and Director
Gary M. Parsons (Principal Executive Officer)
II-8
<PAGE>
/s/ Stephen D. Peck Vice President and May 13, 1998
- ---------------------------- Chief Financial Officer
Stephen D. Peck (Principal Financial and
Accounting Officer)
/s/ Douglas I. Brandon Director May 13, 1998
- ----------------------------
Douglas I. Brandon
/s/ Ho Siaw Hong Director May 13, 1998
- ----------------------------
Ho Siaw Hong
/s/ Roderick M. Sherwood III Director May 13, 1998
- ----------------------------
Roderick M. Sherwood, III
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of Fairfax, Commonwealth
of Virginia, on May 13, 1998.
AMSC SALES CORPORATION, LTD.
By: /s/ Randy S. Segal
-------------------------------
Name: Randy S. Segal
Title: Vice President, General
Counsel and Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Gary M. Parsons and Randy S. Segal, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any and all post-effective amendments to this registration
statement, and to file the same, with exhibits thereto, and other documents in
connection therewith with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all and
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or either of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Gary M. Parsons Chief Executive Officer May 13, 1998
- ------------------------- and Director
Gary M. Parsons
/s/ Stephen D. Peck Vice President and May 13, 1998
- ------------------------- Chief Financial Officer
Stephen D. Peck (Principal Financial and
Accounting Officer)
II-10
<PAGE>
/s/ Walter V. Purnell, Jr. Director May 13, 1998
- --------------------------
Walter V. Purnell, Jr.
/s/ Randy S. Segal Director May 13, 1998
- --------------------------
Randy S. Segal
/s/ Avril G. Harvey Director May 13, 1998
- --------------------------
Avril G. Harvey
/s/ Catherine B. Sittig Director May 13, 1998
- --------------------------
Catherine B. Sittig
II-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of Fairfax, Commonwealth
of Virginia, on May 13, 1998.
AMSC SUBSIDIARY CORPORATION
By: /s/ Randy S. Segal
-----------------------------------
Name: Randy S. Segal
Title: Vice President, General
Counsel and Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Gary M. Parsons and Randy S. Segal, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any and all post-effective amendments to this registration
statement, and to file the same, with exhibits thereto, and other documents in
connection therewith with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all and
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or either of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Jack A. Shaw Director May 13, 1998
- -------------------------------
Jack A. Shaw
/s/ Gary M. Parsons Chief Executive Officer May 13, 1998
- -------------------------------
Gary M. Parsons (Principal Executive Officer)
II-12
<PAGE>
/s/ Stephen D. Peck Vice President and May 13, 1998
- -------------------------------
Stephen D. Peck Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Douglas I. Brandon Director May 13, 1998
- -------------------------------
Douglas I. Brandon
/s/ Ho Siaw Hong Director May 13, 1998
- -------------------------------
Ho Siaw Hong
/s/ Roderick M. Sherwood III Director May 13, 1998
- -------------------------------
Roderick M. Sherwood, III
/s/ Albert L. Zesiger Director May 13, 1998
- -------------------------------
Albert L. Zesiger
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of Fairfax, Commonwealth
of Virginia, on May 13, 1998.
AMERICAN MOBILE SATELLITE SALES
CORPORATION
By: /s/ Randy S. Segal
------------------------------
Name: Randy S. Segal
Title: Vice President, General
Counsel and Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Gary M. Parsons and Randy S. Segal, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any and all post-effective amendments to this registration
statement, and to file the same, with exhibits thereto, and other documents in
connection therewith with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all and
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or either of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Jack A. Shaw Director May 13, 1998
- -------------------------------
Jack A. Shaw
/s/ Gary M. Parsons Chief Executive Officer May 13, 1998
- -------------------------------
Gary M. Parsons (Principal Executive Officer)
II-14
<PAGE>
/s/ Stephen D. Peck Vice President and May 13, 1998
- -------------------------------
Stephen D. Peck Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Douglas I. Brandon Director May 13, 1998
- -------------------------------
Douglas I. Brandon
/s/ Ho Siaw Hong Director May 13, 1998
- -------------------------------
Ho Siaw Hong
/s/ Roderick M. Sherwood III Director May 13, 1998
- -------------------------------
Roderick M. Sherwood, III
/s/ Albert L. Zesiger Director May 13, 1998
- -------------------------------
Albert L. Zesiger
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of Fairfax, Commonwealth
of Virginia, on May 13, 1998.
AMSC ARDIS ACQUISITION, INC.
By: /s/ Randy S. Segal
---------------------------------
Name: Randy S. Segal
Title: Vice President, General
Counsel and Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Gary M. Parsons and Randy S. Segal, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any and all post-effective amendments to this registration
statement, and to file the same, with exhibits thereto, and other documents in
connection therewith with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all and
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or either of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Jack A. Shaw Director May 13, 1998
- -----------------------------
Jack A. Shaw
/s/ Gary M. Parsons Chief Executive Officer May 13, 1998
- -----------------------------
Gary M. Parsons (Principal Executive Officer)
II-16
<PAGE>
/s/ Stephen D. Peck Vice President and May 13, 1998
- -----------------------------
Stephen D. Peck Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Douglas I. Brandon Director May 13, 1998
- -----------------------------
Douglas I. Brandon
/s/ Ho Siaw Hong Director May 13, 1998
- -----------------------------
Ho Siaw Hong
/s/ Roderick M. Sherwood III Director May 13, 1998
- -----------------------------
Roderick M. Sherwood, III
II-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of Fairfax, Commonwealth
of Virginia, on May 13, 1998.
AMSC ARDIS, INC.
By: /s/ Randy S. Segal
----------------------------
Name: Randy S. Segal
Title: Vice President, General
Counsel and Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Gary M. Parsons and Randy S. Segal, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any and all post-effective amendments to this registration
statement, and to file the same, with exhibits thereto, and other documents in
connection therewith with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all and
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or either of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Jack A. Shaw Director May 13, 1998
- -----------------------------
Jack A. Shaw
/s/ Gary M. Parsons Chief Executive Officer May 13, 1998
- -----------------------------
Gary M. Parsons (Principal Executive Officer)
II-18
<PAGE>
/s/ Stephen D. Peck Vice President and May 13, 1998
- -----------------------------
Stephen D. Peck Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Douglas I. Brandon Director May 13, 1998
- -----------------------------
Douglas I. Brandon
/s/ Ho Siaw Hong Director May 13, 1998
- -----------------------------
Ho Siaw Hong
/s/ Roderick M. Sherwood III Director May 13, 1998
- -----------------------------
Roderick M. Sherwood, III
II-19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of Fairfax, Commonwealth
of Virginia, on May 13, 1998.
RADIO DATA NETWORK HOLDING
CORPORATION
By: /s/ Randy S. Segal
----------------------------
Name: Randy S. Segal
Title: Vice President, General
Counsel and Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Gary M. Parsons and Randy S. Segal, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any and all post-effective amendments to this registration
statement, and to file the same, with exhibits thereto, and other documents in
connection therewith with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all and
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or either of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Jack A. Shaw Director May 13, 1998
- ----------------------------
Jack A. Shaw
/s/ Gary M. Parsons Chief Executive Officer May 13, 1998
- ----------------------------
Gary M. Parsons (Principal Executive Officer)
II-20
<PAGE>
/s/ Stephen D. Peck Vice President and May 13, 1998
- -----------------------------
Stephen D. Peck Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Douglas I. Brandon Director May 13, 1998
- -----------------------------
Douglas I. Brandon
/s/ Ho Siaw Hong Director May 13, 1998
- -----------------------------
Ho Siaw Hong
/s/ Roderick M. Sherwood III Director May 13, 1998
- -----------------------------
Roderick M. Sherwood, III
II-21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of Fairfax, Commonwealth
of Virginia, on May 13, 1998.
ARDIS HOLDING COMPANY
By: /s/ Randy S. Segal
----------------------------
Name: Randy S. Segal
Title: Vice President and Secretary
For: AMSC ARDIS, Inc., Partner
By: /s/ Randy S. Segal
----------------------------
Name: Randy S. Segal
Title: Vice President and Secretary
For: AMSC ARDIS Acquisition, Inc., Partner
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Gary M. Parsons and Randy S. Segal, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any and all post-effective amendments to this registration
statement, and to file the same, with exhibits thereto, and other documents in
connection therewith with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all and
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or either of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
By: AMSC ARDIS, Inc., Partner
Signature Title Date
/s/ Jack A. Shaw Chairman of the Board May 13, 1998
- ---------------------------------
Jack A. Shaw of Directors
II-22
<PAGE>
/s Gary M. Parsons Chief Executive Officer May 13, 1998
- ---------------------------------
Gary M. Parsons and Director
(Principal Executive Officer)
/s/ Stephen D. Peck Vice President and May 13, 1998
- ---------------------------------
Stephen D. Peck Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Douglas I. Brandon Director May 13, 1998
- ---------------------------------
Douglas I. Brandon
/s/ Ho Siaw Hong Director May 13, 1998
- ---------------------------------
Ho Siaw Hong
/s/ Roderick M. Sherwood III Director May 13, 1998
- ---------------------------------
Roderick M. Sherwood, III
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Gary M. Parsons and Randy S. Segal, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any and all post-effective amendments to this registration
statement, and to file the same, with exhibits thereto, and other documents in
connection therewith with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all and
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or either of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
By: AMSC ARDIS Acquisition, Inc. Partner
Signature Title Date
/s/ Jack A. Shaw Chairman of the Board May 13, 1998
- ----------------------------
Jack A. Shaw of Directors
II-23
<PAGE>
/s/ Gary M. Parsons Chief Executive Officer May 13, 1998
- ----------------------------
Gary M. Parsons and Director
(Principal Executive Officer)
/s/ Stephen D. Peck Vice President and May 13, 1998
- ----------------------------
Stephen D. Peck Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Douglas I. Brandon Director May 13, 1998
- ----------------------------
Douglas I. Brandon
/s/ Ho Siaw Hong Director May 13, 1998
- ----------------------------
Ho Siaw Hong
/s/ Roderick M. Sherwood III Director May 13, 1998
- ----------------------------
Roderick M. Sherwood, III
II-24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of Fairfax, Commonwealth
of Virginia, on May 13, 1998.
ARDIS COMPANY
By: /s/ Randy S. Segal
----------------------------------------------
Name: Randy S. Segal
Title: Vice President and Secretary
For: ARDIS Holding Company, By Its Two Partners,
AMSC ARDIS, Inc. and AMSC ARDIS Acquisition,
Inc.
By: /s/ Randy S. Segal
----------------------------------------------
Name: Randy S. Segal
Title: Vice President and Secretary
For: Radio Data Network Holding Corporation,
Partner
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Gary M. Parsons and Randy S. Segal, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any and all post-effective amendments to this registration
statement, and to file the same, with exhibits thereto, and other documents in
connection therewith with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all and
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or either of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
II-25
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
By: ARDIS Holding Company, By Its Two Partners,
AMSC ARDIS, Inc. and AMSC ARDIS Acquisition, Inc.
Signature Title Date
/s/ Jack A. Shaw Chairman of the Board May 13, 1998
- ----------------------------
Jack A. Shaw of Directors
/s/ Gary M. Parsons Chief Executive Officer May 13, 1998
- ----------------------------
Gary M. Parsons and Director
(Principal Executive Officer)
/s/ Stephen D. Peck Vice President and May 13, 1998
- ----------------------------
Stephen D. Peck Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Douglas I. Brandon Director May 13, 1998
- ----------------------------
Douglas I. Brandon
/s/ Ho Siaw Hong Director May 13, 1998
- ----------------------------
Ho Siaw Hong
/s/ Roderick M. Sherwood III Director May 13, 1998
- ----------------------------
Roderick M. Sherwood, III
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Gary M. Parsons and Randy S. Segal, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capacities, to sign any and all post-effective amendments to this registration
statement, and to file the same, with exhibits thereto, and other documents in
connection therewith with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all and
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or either of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
II-26
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
By: Radio Data Network Corporation, Partner
Signature Title Date
/s/ Jack A. Shaw Chairman of the Board May 13, 1998
- ----------------------------
Jack A. Shaw of Directors
/s/ Gary M. Parsons Chief Executive Officer May 13, 1998
- ----------------------------
Gary M. Parsons and Director
(Principal Executive Officer)
/s/ Stephen D. Peck Vice President and May 13, 1998
- ----------------------------
Stephen D. Peck Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Douglas I. Brandon Director May 13, 1998
- ----------------------------
Douglas I. Brandon
/s/ Ho Siaw Hong Director May 13, 1998
- ----------------------------
Ho Siaw Hong
/s/ Roderick M. Sherwood III Director May 13, 1998
- ----------------------------
Roderick M. Sherwood, III
II-27
<PAGE>
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit
- -------
<S> <C>
2.1 Stock Purchase Agreement, by and among the Company, Motorola,
Motorola ARDIS Acquisition, Inc., Motorola ARDIS, Inc. and AMSC,
dated as of December 31, 1997 (incorporated by reference herein from
Exhibit 10.65 to Holdings' Annual Report on Form 10-K for the year
ending December 31, 1997).
2.2 Amendment No. 1 to Stock Purchase Agreement, by and among the
Company, Motorola, Motorola ARDIS Acquisition, Inc., Motorola ARDIS,
Inc. and AMSC, dated as of March 31, 1998 (incorporated by reference
herein from Exhibit 4.2 to the Schedule 13D dated March 31, 1998
filed by Motorola, Inc.).
4.1 Indenture dated March 31, 1998 between the Company and State Street
Bank and Trust Company (filed herewith).
4.2 Pledge Security Agreement dated March 31, 1998 by and among the
Company and State Street Bank and Trust Company (as Trustee and as
Collateral Agent) (filed herewith).
4.3 Debt Registration Rights Agreement dated March 31, 1998 by and among
the Company, Holdings, American Mobile Satellite Sales Corporation,
AMSC Sales Corporation, Ltd., AMSC Subsidiary Corporation, ARDIS
Company, Motorola ARDIS Acquisition, Inc., ARDIS Holding Company,
Radio Data Network Holding Corporation, Bear, Stearns & Co. Inc.,
J.P. Morgan Securities Inc., TD Securities (USA) Inc., and
BancAmerica Robertson Stephens (filed herewith).
4.4 Warrant Agreement dated March 31, 1998 between Holdings and State
Street Bank and Trust Company (filed herewith).
4.5 Warrant Registration Rights Agreement dated March 31, 1998 by and
among Holdings, Bear, Stearns & Co. Inc., J.P. Morgan Securities
Inc., TD Securities (USA) Inc., and BancAmerica Robertson Stephens
(including form of Warrant Certificate) (filed herewith).
4.6 Unit Agreement, dated March 31, 1998 by and among the Company,
Holdings and State Street Bank and Trust Company (filed herewith).
5.1 Opinion of Arnold & Porter.*
8.1 Tax Opinion of Arnold & Porter.*
23.1 Consent of The Strategis Group (filed herewith).
23.2 Consent of Arthur Andersen LLP (filed herewith).
23.3 Consent of KPMG Peat Marwick LLP (filed herewith).
23.4 Consent of Arnold & Porter (included in Exhibit 5.1 and Exhbit 8.1,
respectively*).
24.1 Powers of Attorney of directors and officers of the Company (included
as part of signature page).
25.1 Statement of Eligibility of Trustee on Form T-1 (filed herewith).
99.1 Form of Letter of Transmittal (filed herewith).
</TABLE>
II-28
<PAGE>
<TABLE>
<S> <C>
99.2 Form of Notice of Guaranteed Delivery (filed herewith).
99.3 Form of Tender Instructions (filed herewith).
</TABLE>
__________
*to be filed by amendment.
II-29
<PAGE>
EXHIBIT 4.1
================================================================================
AMSC ACQUISITION COMPANY, INC.
SERIES A AND SERIES B
12 1/4% SENIOR NOTES DUE 2008
INDENTURE
March 31, 1998
State Street Bank and Trust Company
Trustee
================================================================================
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section
310 (a)(1)........................................................ 7.10
(a)(2)............................................................ 7.10
(a)(3)............................................................ N.A.
(a)(4)............................................................ N.A.
(a)(5)............................................................ 7.10
(i)(b)............................................................ 7.10
(ii)(c)........................................................... N.A.
311(a)............................................................ 7.11
(b)............................................................... 7.11
(iii)(c).......................................................... N.A.
312 (a)........................................................... 2.05
(b)............................................................... 13.03
(iv)(c)........................................................... 13.03
313(a)............................................................ 7.06
(b)(2)............................................................ 7.07
(v)(c)............................................................ 7.06;
13.02
(vi)(d)........................................................... 7.06
314(a)............................................................ 4.03;
13.02
(c)(1)............................................................ 13.04
(c)(2)............................................................ 13.04
(c)(3)............................................................ N.A.
(vii)(e).......................................................... 13.05
(f)............................................................... N.A.
315 (a)........................................................... 7.01
(b)............................................................... 7.05,
13.02
(A)(c)............................................................ 7.01
(d)............................................................... 7.01
(e)............................................................... 6.11
316 (a)(last sentence)............................................ 2.09
(a)(1)(A)......................................................... 6.05
(a)(1)(B)......................................................... 6.04
(a)(2)............................................................ N.A.
(b)............................................................... 6.07
(B)(c)............................................................ 2.12
317 (a)(1)........................................................ 6.08
(a)(2)............................................................ 6.09
(b)............................................................... 2.04
318 (a)........................................................... 13.01
(b)............................................................... N.A.
(c)............................................................... 13.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.................. 1
SECTION 1.01. DEFINITIONS................................................. 1
SECTION 1.02. OTHER DEFINITIONS........................................... 15
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT........... 15
SECTION 1.04. RULES OF CONSTRUCTION....................................... 16
ARTICLE 2. THE NOTES................................................... 16
SECTION 2.01. FORM AND DATING............................................. 16
SECTION 2.02. EXECUTION AND AUTHENTICATION................................ 18
SECTION 2.03. REGISTRAR AND PAYING AGENT.................................. 18
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST......................... 18
SECTION 2.05. HOLDER LISTS................................................ 19
SECTION 2.06. TRANSFER AND EXCHANGE....................................... 19
SECTION 2.07. REPLACEMENT NOTES........................................... 31
SECTION 2.08. OUTSTANDING NOTES........................................... 31
SECTION 2.09. TREASURY NOTES.............................................. 32
SECTION 2.10. TEMPORARY NOTES............................................. 32
SECTION 2.11. CANCELLATION................................................ 32
SECTION 2.12. DEFAULTED INTEREST.......................................... 32
ARTICLE 3. REDEMPTION AND PREPAYMENT................................... 33
SECTION 3.01. NOTICES TO TRUSTEE.......................................... 33
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED........................... 33
SECTION 3.03. NOTICE OF REDEMPTION........................................ 33
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.............................. 34
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE................................. 34
i
<PAGE>
SECTION 3.06. NOTES REDEEMED IN PART...................................... 34
SECTION 3.07. OPTIONAL REDEMPTION......................................... 35
SECTION 3.08. MANDATORY REDEMPTION........................................ 35
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS......... 35
ARTICLE 4. COVENANTS................................................... 37
SECTION 4.01. PAYMENT OF NOTES............................................ 37
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY............................. 37
SECTION 4.03. REPORTS..................................................... 38
SECTION 4.04. COMPLIANCE CERTIFICATE...................................... 38
SECTION 4.05. TAXES....................................................... 39
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.............................. 39
SECTION 4.07. RESTRICTED PAYMENTS......................................... 39
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES................................................ 41
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.. 42
SECTION 4.10. ASSET SALES................................................. 44
SECTION 4.11. TRANSACTIONS WITH AFFILIATES................................ 45
SECTION 4.12. LIENS....................................................... 45
SECTION 4.13. LINE OF BUSINESS............................................ 46
SECTION 4.14. CORPORATE EXISTENCE......................................... 46
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.................. 46
SECTION 4.16. MAINTENANCE OF INSURANCE.................................... 47
SECTION 4.17. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS............... 49
SECTION 4.18. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF
WHOLLY OWNED SUBSIDIARIES................................... 49
SECTION 4.19. ADDITIONAL NOTE GUARANTEES.................................. 49
SECTION 4.20. PAYMENTS FOR CONSENTS....................................... 49
ARTICLE 5. SUCCESSORS.................................................. 50
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.................... 50
ii
<PAGE>
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED........................... 50
ARTICLE 6. DEFAULTS AND REMEDIES....................................... 51
SECTION 6.01. EVENTS OF DEFAULT........................................... 51
SECTION 6.02. ACCELERATION................................................ 53
SECTION 6.03. OTHER REMEDIES.............................................. 53
SECTION 6.04. WAIVER OF PAST DEFAULTS..................................... 54
SECTION 6.05. CONTROL BY MAJORITY......................................... 54
SECTION 6.06. LIMITATION ON SUITS......................................... 54
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT............... 54
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.................................. 55
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM............................ 55
SECTION 6.10. PRIORITIES.................................................. 55
SECTION 6.11. UNDERTAKING FOR COSTS....................................... 56
ARTICLE 7. TRUSTEE..................................................... 56
SECTION 7.01. DUTIES OF TRUSTEE........................................... 56
SECTION 7.02. RIGHTS OF TRUSTEE........................................... 57
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE................................ 57
SECTION 7.04. TRUSTEE'S DISCLAIMER........................................ 58
SECTION 7.05. NOTICE OF DEFAULTS.......................................... 58
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.................. 58
SECTION 7.07. COMPENSATION AND INDEMNITY.................................. 58
SECTION 7.08. REPLACEMENT OF TRUSTEE...................................... 59
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC............................ 60
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION............................... 60
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY........... 60
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.................... 60
iii
<PAGE>
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.... 60
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.............................. 60
SECTION 8.03. COVENANT DEFEASANCE......................................... 61
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.................. 61
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS....................... 63
SECTION 8.06. REPAYMENT TO COMPANY........................................ 63
SECTION 8.07. REINSTATEMENT............................................... 63
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER............................ 64
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES......................... 64
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES............................ 64
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT......................... 66
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS........................... 66
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES............................ 66
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC............................. 66
ARTICLE 10. SUBORDINATION OF HOLDINGS GUARANTEE......................... 67
SECTION 10.01. AGREEMENT TO SUBORDINATE.................................... 67
SECTION 10.02. CERTAIN DEFINITIONS......................................... 67
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY........................ 67
SECTION 10.04. DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS................... 68
SECTION 10.05. ACCELERATION OF NOTES....................................... 68
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER......................... 69
SECTION 10.07. NOTICE BY COMPANY........................................... 69
SECTION 10.08. SUBROGATION................................................. 69
SECTION 10.09. RELATIVE RIGHTS............................................. 69
SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY................ 70
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.................... 70
iv
<PAGE>
SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT.......................... 70
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION....................... 70
SECTION 10.14. AMENDMENTS.................................................. 71
ARTICLE 11. SUBSIDIARY GUARANTEES....................................... 71
SECTION 11.01. SUBSIDIARY GUARANTEE........................................ 71
SECTION 11.02. LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY................ 72
SECTION 11.03. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.............. 72
SECTION 11.04. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN
TERMS....................................................... 73
SECTION 11.05. RELEASES FOLLOWING SALE OF ASSETS........................... 73
ARTICLE 12. HOLDINGS GUARANTEE.......................................... 74
SECTION 12.01. HOLDINGS GUARANTEE.......................................... 74
SECTION 12.02. LIMITATION ON HOLDINGS LIABILITY............................ 75
SECTION 12.03. EXECUTION AND DELIVERY OF HOLDINGS GUARANTEE................ 75
SECTION 12.04. HOLDINGS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS............ 75
SECTION 12.05. SUBORDINATION............................................... 76
ARTICLE 13. MISCELLANEOUS............................................... 76
SECTION 13.01. TRUST INDENTURE ACT CONTROLS................................ 76
SECTION 13.02. NOTICES..................................................... 76
SECTION 13.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF
NOTES....................................................... 77
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.......... 77
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION............... 78
SECTION 13.06. RULES BY TRUSTEE AND AGENTS................................. 78
SECTION 13.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS................................................ 78
SECTION 13.08. GOVERNING LAW............................................... 78
SECTION 13.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS............... 79
SECTION 13.10. SUCCESSORS.................................................. 79
v
<PAGE>
SECTION 13.11. SEVERABILITY................................................ 79
SECTION 13.12. COUNTERPART ORIGINALS....................................... 79
SECTION 13.13. TABLE OF CONTENTS, HEADINGS, ETC............................ 79
EXHIBITS
Exhibit A1 FORM OF NOTE
Exhibit A2 FORM OF TEMPORARY REGULATION S NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
INVESTOR
Exhibit E FORM OF NOTE GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
SCHEDULES
Schedule I Schedule of Guarantors
vi
<PAGE>
INDENTURE dated as of March 31, 1998 among AMSC Acquisition Company,
Inc. a Delaware corporation (the "COMPANY"), American Mobile Satellite
Corporation, American Mobile Satellite Sales Corporation, AMSC Sales Corporation
Ltd., AMSC Subsidiary Corporation, ARDIS Company, Motorola ARDIS, Inc., Motorola
ARDIS Acquisition, Inc., ARDIS Holding Company, and Radio Data Network Holding
Corporation (collectively, the "GUARANTORS") and State Street Bank and Trust
Company, as trustee (the "TRUSTEE").
The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 12 1/4% Series A Senior Notes due 2008 (the "SERIES A NOTES") and the 12
1/4% Series B Senior Notes due 2008 (the "SERIES B NOTES" and, together with the
Series A Notes, the "NOTES"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"144A GLOBAL NOTE" means a global note in the form of Exhibit A1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"ACQUIRED INDEBTEDNESS" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"ACTEL AGREEMENT" means the agreement between Holdings and African
Continental Telecommunications Ltd., dated as of December 4, 1997, pursuant to
which Holdings will lease its MSAT-2 satellite to African Continental
Telecommunications Ltd., as such agreement is in effect on the date hereof.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"APPLICABLE PROCEDURES" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
<PAGE>
"ASSET SALE" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory in the ordinary course of
business consistent with past practices (provided that the sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company and its Subsidiaries taken as a whole will be governed by Section 4.15
hereof and/or Section 5.01 hereof and not by the provisions of Section 4.10
hereof), and (ii) the issue or sale by the Company or any of its Subsidiaries of
Equity Interests of any of the Company's Subsidiaries, in the case of either
clause (i) or (ii), whether in a single transaction or a series of related
transactions (a) that have a fair market value in excess of $1.0 million or (b)
for net proceeds in excess of $1.0 million. Notwithstanding the foregoing, the
following items shall not be deemed to be Asset Sales: (i) a transfer of assets
by the Company to a Wholly Owned Subsidiary or by a Wholly Owned Subsidiary to
the Company or to another Wholly Owned Subsidiary, (ii) an issuance of Equity
Interests by a Wholly Owned Subsidiary to the Company or to another Wholly Owned
Subsidiary, and (iii) a Restricted Payment that is permitted by Section 4.07
hereof.
"ATTRIBUTABLE INDEBTEDNESS" in respect of a sale and leaseback
transaction means, at the time of determination, the present value (discounted
at the rate of interest implicit in such transaction, determined in accordance
with GAAP) of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended).
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"BOARD OF DIRECTORS" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"BORROWING BASE" means, as of any date, an amount equal to 85% of the
face amount of all accounts receivable owned by the Company and its Subsidiaries
as of such date that are not more than 90 days past due, all calculated on a
consolidated basis and in accordance with GAAP. To the extent that information
is not available as to the amount of accounts receivable or trade payables as of
a specific date, the Company may utilize the most recent available information
for purposes of calculating the Borrowing Base.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"CASH EQUIVALENTS" means (i) U.S. dollars, (ii) securities issued or
directly and fully guaranteed or insured by the U.S. government or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than
2
<PAGE>
six months from the date of acquisition, (iii) certificates of deposit and
eurodollar time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any domestic commercial bank having
capital and surplus in excess of $500.0 million and a Thompson Bank Watch Rating
of "B" or better, (iv) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the qualifications
specified in clause (iii) above, (v) commercial paper having the highest rating
obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation
and in each case maturing within six months after the date of acquisition and
(vi) money market funds the assets of which constitute Cash Equivalents of the
kinds described in clauses (i)-(v) of this definition.
"CEDEL" means Cedel Bank, SA.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act) other than a Principal or a Related Party of a Principal (as defined
below), (ii) the adoption of a plan relating to the liquidation or dissolution
of the Company, (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than the Principals and their Related
Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition), directly or indirectly, of more than
40% of the Voting Stock of Holdings (measured by voting power rather than number
of shares), (iv) the consummation of the first transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above) becomes the "beneficial owner" (as defined above),
directly or indirectly, of more of the Voting Stock of Holdings (measured by
voting power rather than number of shares) than is at the time "beneficially
owned" (as defined above) by the Principals and their Related Parties in the
aggregate, (v) the first day on which a majority of the members of the Board of
Directors of the Company or Holdings are not Continuing Directors or (vi) the
first day on which Holdings ceases to own 80% of the outstanding Voting Stock of
the Company.
"COMMUNICATIONS ASSET" means a terrestrial or satellite antenna,
licensed site, base station, communications ground segment, network operations
center or other telecommunications facility (other than a satellite) that is
used or useful in a Permitted Business.
"COMPANY" means AMSC Acquisition Company, Inc., and any and all
successors thereto.
"CONSOLIDATED ANNUALIZED CASH FLOW" means, with respect to any Person
for any period, the product of (x) the Consolidated Cash Flow of such Person for
the most recently completed fiscal quarter for which internal financial
statements are available, times (y) four.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of
3
<PAGE>
such Person and its Subsidiaries for such period, to the extent that such
provision for taxes was included in computing such Consolidated Net Income, plus
(iii) consolidated interest expense of such Person and its Subsidiaries for such
period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations imputed interest with respect to Attributable
Indebtedness, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations), to the extent that any such expense
was deducted in computing such Consolidated Net Income, plus (iv) depreciation,
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash expenses (excluding any such non-cash expense to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Subsidiaries for such period to the extent that
such depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, minus (v) non-cash items increasing such
Consolidated Net Income for such period, in each case, on a consolidated basis
and determined in accordance with GAAP. Notwithstanding the foregoing, the
provision for taxes on the income or profits of, and the depreciation and
amortization and other non-cash expenses of, a Subsidiary of the referent Person
shall be added to Consolidated Net Income to compute Consolidated Cash Flow only
to the extent that a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"CONSOLIDATED INDEBTEDNESS" means, with respect to any Person as of
any date of determination, the sum, without duplication, of (i) the total amount
of Indebtedness of such Person and its Subsidiaries, plus (ii) the total amount
of Indebtedness of any other Person, to the extent that such Indebtedness has
been Guaranteed by the referent Person or one or more of its Subsidiaries, plus
(iii) the aggregate liquidation value of all Disqualified Stock of such Person
and all preferred stock of Subsidiaries of such Person, in each case, determined
on a consolidated basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person for
any period, the sum of (i) the consolidated interest expense of such Person and
its Subsidiaries for such period, whether paid or accrued (including, without
limitation, amortization or original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations, imputed
interest with respect to Attributable Indebtedness, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations) and (ii) the consolidated interest expense of such Person and its
Subsidiaries that was capitalized during such period, and (iii) any interest
expense on Indebtedness of another Person that is guaranteed by such Person or
one of its Subsidiaries or secured by a Lien on assets of such Person or one of
its Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv)
the product of (a) all dividend payments on any series of preferred stock of
such Person or any of its Subsidiaries, times (b) a fraction, the numerator of
which is one and the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of such Person, expressed as a
decimal, in each case, on a consolidated basis and in accordance with GAAP.
4
<PAGE>
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid in
cash to the referent Person or a Wholly Owned Subsidiary thereof that is a
Subsidiary Guarantor, (ii) the Net Income of any Subsidiary shall be excluded to
the extent that the declaration or payment of dividends or similar distributions
by that Subsidiary of that Net Income is not at the date of determination
permitted without any prior governmental approval (that has not been obtained)
or, directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its stockholders, (iii) the Net
Income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded and (iv) the
cumulative effect of a change in accounting principles shall be excluded.
"CONSOLIDATED NET WORTH" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date hereof in the book value of any asset
owned by such Person or a consolidated Subsidiary of such Person, (y) all
investments as of such date in unconsolidated Subsidiaries and in Persons that
are not Subsidiaries (except, in each case, Permitted Investments), and (z) all
unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH" of any Person at any time means the
Consolidated Net Worth of such Person at such time less goodwill and any other
intangible assets reflected on the consolidated balance sheet of such Person at
such time.
"CONTINUING DIRECTORS" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date hereof, (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election or (iii) was a designee of any Principal at a time when
such Principal owned more than 10% of the Voting Stock of Holdings.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the
Trustee specified in Section 13.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"CREDIT FACILITIES" means, with respect to the Company, one or more
debt facilities (including, without limitation, the Revolving Credit Facility)
or commercial paper facilities with banks or other institutional lenders
providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time. Indebtedness under
Credit Facilities outstanding on the date on which Notes are first issued and
authenticated
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hereunder shall be deemed to have been incurred on such date in reliance on the
exception provided by clause (i) of the definition of Permitted Indebtedness.
"CUMULATIVE CONSOLIDATED CASH FLOW" means the aggregate Consolidated
Cash Flow of a Person from a particular point in time.
"CUSTODIAN" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"DEBT TO CASH FLOW RATIO" means, with respect to any Person as of any
date of determination (the "CALCULATION DATE") the ratio of (a) the Consolidated
Indebtedness of the Company as of such date to (b) the Consolidated Annualized
Cash Flow of the Company for the most recent full fiscal Reference Period ending
immediately prior to such date for which internal financial statements are
available, determined on a pro forma basis after giving effect to all
acquisitions or dispositions of assets made by the Company and its Subsidiaries
from the beginning of such Reference Period through and including such date of
determination (including any related financing transactions) as if such
acquisitions and dispositions had occurred at the beginning of such quarter. In
addition, for purposes of making the computation referred to above, (i)
acquisitions that have been made by the Company or any of its Subsidiaries,
including through mergers or consolidations and including any related financing
transactions, during the reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be deemed to have occurred on the
first day of the reference period and Consolidated Cash Flow for such reference
period shall be calculated without giving effect to clause (iii) of the proviso
set forth in the definition of Consolidated Net Income, and (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded.
"DEBT REGISTRATION RIGHTS AGREEMENT" means the Debt Registration
Rights Agreement, dated as of March 31, 1998, by and among the Company and the
other parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time.
"DEFAULT" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"DEFINITIVE NOTE" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A1 hereto except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.
"DEPOSITARY" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature; provided, however, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to
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require the Company to repurchase such Capital Stock upon the occurrence of a
Change of Control or an Asset Sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that the Company may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with Section 4.07 hereof.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EQUITY OFFERING" means (i) an offering of common stock of the Company
or a capital contribution to the Company's common equity of the net cash
proceeds of a public offering of Holdings or (ii) one or more Strategic Equity
Investments (other than in connection with a Change of Control).
"EUROCLEAR" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE NOTES" means the Notes issued in the Exchange Offer pursuant
to Section 2.06(f) hereof.
"EXCHANGE OFFER" has the meaning set forth in the Debt Registration
Rights Agreement.
"EXCHANGE OFFER REGISTRATION STATEMENT" has the meaning set forth in
the Debt Registration Rights Agreement.
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Revolving Credit Facility) in
existence on the date hereof, until such amounts are repaid.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"GLOBAL NOTES" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibits A1 and A2 hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(i), 2.06(d)(ii), 2.06(d)(iii) or 2.06(f) hereof.
"GLOBAL NOTE LEGEND" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
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"GUARANTORS" means (i) Holdings and (ii) the Subsidiary Guarantors.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"HOLDER" means a Person in whose name a Note is registered.
"HOLDINGS" means American Mobile Satellite Corporation and all
successors thereto.
"IAI GLOBAL NOTE" means the Global Note in the form of Exhibit A1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person) and, to the extent not otherwise included, the Guarantee
by such Person of any indebtedness of any other Person. The amount of any
Indebtedness outstanding as of any date shall be (i) the accreted value thereof,
in the case of any Indebtedness issued with original issue discount, and (ii)
the principal amount thereof, together with any interest thereon that is more
than 30 days past due, in the case of any other Indebtedness.
"INDENTURE" means this Indenture, as amended or supplemented from time
to time.
"INDIRECT PARTICIPANT" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"INVESTMENTS" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Subsidiary of the Company sells or otherwise disposes of
any Equity Interests of any direct or indirect Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such Person is no
longer a Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the
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Equity Interests of such Subsidiary not sold or disposed of in an amount
determined as provided in the final paragraph of Section 4.07 hereof.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, the city in which the corporate trust
office of the Trustee is located, or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"LETTER OF TRANSMITTAL" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"LIQUIDATED DAMAGES" means all liquidated damages then owing pursuant
to Section 5 of the Debt Registration Rights Agreement.
"NET INCOME" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries and
(ii) any extraordinary or nonrecurring gain (but not loss), together with any
related provision for taxes on such extraordinary or nonrecurring gain (but not
loss).
"NET PROCEEDS" means the aggregate cash and Cash Equivalent proceeds
received by the Company or any of its Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien on the asset or assets that were
the subject of such Asset Sale and any reserve for adjustment in respect of the
sale price of such asset or assets established in accordance with GAAP.
"NON-U.S. PERSON" means a Person who is not a U.S. Person.
"NOTE GUARANTEE" means the Guarantee by each Guarantor of the
Company's payment obligations under this Indenture and the Notes, executed
pursuant to the provisions of this Indenture.
"NOTES" has the meaning assigned to it in the preamble to this
Indenture.
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"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFERING" means the offering of the Notes by the Company.
"OFFICER" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Sections 13.04 and 13.05 hereof.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
13.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"PARTICIPANT" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"PARTICIPATING BROKER-DEALER" has the meaning set forth in the Debt
Registration Rights Agreement.
"PERMITTED BUSINESS" means the business of the Company on the date
hereof and businesses reasonably related or incidental thereto.
"PERMITTED INVESTMENTS" means (a) any Investment in the Company or in
a Wholly Owned Subsidiary of the Company that is a Subsidiary Guarantor (b) any
Investment in Cash Equivalents; (c) any Investment by the Company or any
Subsidiary of the Company in a Person, if as a result of such Investment (i)
such Person becomes a Wholly Owned Subsidiary of the Company and a Subsidiary
Guarantor or (ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Wholly Owned Subsidiary of the Company that is
a Subsidiary Guarantor; (d) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.10 hereof; and (e) any acquisition of assets solely in
exchange for the issuance of Equity Interests (other than Disqualified Stock) of
the Company.
"PERMITTED LIENS" means (i) Liens in favor of the Company; (ii) Liens
on property of a Person existing at the time such Person is merged into or
consolidated with the Company or any Subsidiary of the Company; provided that
such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Company; (iii) Liens on property existing
at the time of acquisition thereof by the Company or any Subsidiary of the
Company, provided that such Liens were in existence prior to the contemplation
of such acquisition; (iv) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other obligations of a
like nature incurred in the ordinary course of business; (v) Liens to secure
Indebtedness (including Capital Lease Obligations) permitted by clause (iv)
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or clause (x) of Section 4.09 hereof covering only the assets acquired with such
Indebtedness; (vi) Liens existing on the date hereof; (vii) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; and (viii) Liens incurred in the ordinary course of business
of the Company or any Subsidiary of the Company with respect to obligations that
do not exceed $5.0 million at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of advances
or credit (other than trade credit in the ordinary course of business) and (b)
do not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by the Company or
such Subsidiary.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the
Company or any of its Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Subsidiaries (other than intercompany
Indebtedness); provided that: (i) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount of (or accreted value, if applicable), plus accrued interest
on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of reasonable expenses incurred in connection
therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
the Company or by the Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"PERSON" means any individual, corporation, limited liability company,
joint stock company, trust, unincorporated organization, government or any
agency or political subdivision thereof or any other entity.
"PLEDGE AGREEMENT" means the Pledge and Security Agreement between the
Company and the Trustee, dated the date hereof and as amended from time to time.
"PRINCIPALS" means Hughes Communications Satellite Services, Inc.,
Singapore Telecommunications Ltd., AT&T Wireless Services, Inc. and Motorola,
Inc.
"PRIVATE PLACEMENT LEGEND" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"REFERENCE PERIOD" means the most recently ended full fiscal quarter.
"REGULATION S" means Regulation S promulgated under the Securities
Act.
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"REGULATION S GLOBAL NOTE" means a Regulation S Temporary Global Note
or Regulation S Permanent Global Note, as appropriate.
"REGULATION S PERMANENT GLOBAL NOTE" means a permanent global Note in
the form of Exhibit A1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"REGULATION S TEMPORARY GLOBAL NOTE" means a temporary global Note in
the form of Exhibit A2 hereto bearing the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its
nominee, issued in a denomination equal to the outstanding principal amount of
the Notes initially sold in reliance on Rule 903 of Regulation S.
"RELATED PARTY" with respect to any Principal means (A) any
controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate
family member (in the case of an individual) of such Principal or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A).
"REPLACEMENT SATELLITE" means any satellite constructed to replace
MSAT-1 or MSAT-2 in the event of a failure of such MSAT-1 or MSAT-2.
"RESPONSIBLE OFFICER," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"RESTRICTED DEFINITIVE NOTE" means a Definitive Note bearing the
Private Placement Legend.
"RESTRICTED GLOBAL NOTE" means a Global Note bearing the Private
Placement Legend.
"RESTRICTED INVESTMENT" means any Investment other than a Permitted
Investment.
"RESTRICTED PERIOD" means the 40-day restricted period as defined in
Regulation S.
"REVOLVING CREDIT FACILITY" means that certain Revolving Credit
Facility, dated as of March 31, 1998, by and among the Company and Morgan
Guaranty Trust Company of New York, Toronto Dominion Bank, Bank of America
National Trust and Savings Association and certain other lenders (collectively,
the "BANKS"), providing for up to $100.0 million of revolving credit borrowings,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
modified, renewed, refunded, replaced or refinanced from time to time.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
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"RULE 903" means Rule 903 promulgated under the Securities Act.
"RULE 904" means Rule 904 promulgated under the Securities Act.
"SATELLITE LEASE ARRANGEMENTS" means the sale or lease of the
Company's MSAT-2 satellite pursuant to the ACTEL Agreement or a replacement
agreement (an "MSAT-2 LEASE AGREEMENT") provided that any such replacement
agreement shall be on commercially reasonable terms, provided that (A) the
consideration received by the Company in respect at such sale or lease (x)
consists solely of cash and (y) constitutes fair market value (as determined by
the Board of Directors of the Company set forth in resolution thereof delivered
to the Company, which determination shall be based upon an opinion or appraisal
issued by an appraisal or investment banking firm of national standing); (B) the
Company shall have acquired (through purchase or lease) capacity on MSAT-1 or a
reasonable substitute thereof either (x) pursuant to the TMI Lease Agreement or
(y) any other agreement with a term not less than the maximum term of the MSAT-2
Lease Agreement then in effect and otherwise on commercially reasonable terms if
(in the case of this clause (y)) in the opinion of a nationally recognized
independent expert (a) the capacity acquired pursuant to such replacement
agreement is sufficient to permit the Company to conduct an operations as
conducted and as contemplated to be conducted through the term of the MSAT-2
Lease Agreement then in effect and (y) the total consideration paid by the
Company for such replacement satellite capacity is no greater than the fair
market value thereof.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SEPARATION DATE" means that earlier of (i) 180 days from the date of
issuance, (ii) such date as the Initial Purchasers may, in their discretion,
deem appropriate, (iii) in the event a Change of Control occurs, the date that
Company mails notice thereof to holders of the Notes, (iv) the commencement of
the Exchange Offer and (v) the effectiveness of the shelf registration statement
relating to the Notes.
"SHAREHOLDER GUARANTORS" means Hughes Communications Satellite
Services, Inc., Singapore Telecommunications Ltd. and Baron Capital Partners,
L.P.
"SHELF REGISTRATION STATEMENT" means the Shelf Registration Statement
as defined in the Debt Registration Rights Agreement.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"STATED MATURITY" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"STRATEGIC EQUITY INVESTMENT" means an investment in Capital Stock
(other than Disqualified Stock) of the Company or Holdings in an aggregate
amount of not less than $50.0 million.
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"STRATEGIC INVESTOR" means a Person engaged in one or more Permitted
Businesses that has, or is a Wholly-Owned Subsidiary of a Person that has, an
equity market capitalization in excess of $1.0 billion.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"SUBSIDIARY GUARANTORS" means (i) American Mobile Satellite Sales
Corporation, AMSC Sales Corporation Ltd., AMSC Subsidiary Corporation and ARDIS
Company and (ii) any other Subsidiary of the Company that executes a Subsidiary
Guarantee in accordance with Section 4.19 hereof, and their respective
successors and assigns.
"TERM LOAN FACILITY" means that certain Credit Agreement, dated as of
March 31, 1998, by and among Holdings and the Banks, providing for up to $100.0
million of borrowings, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, modified, renewed, refunded, replaced or refinanced from
time to time.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA.
"TRUSTEE" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"UNIT AGREEMENT" means the Unit Agreement among the Company, Holdings
and the Trustee, dated the date hereof and as amended from time to time.
"UNRESTRICTED GLOBAL NOTE" means a permanent global Note in the form
of Exhibit A1 attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"UNRESTRICTED DEFINITIVE NOTE" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"U.S. PERSON" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"VENDOR FINANCING INDEBTEDNESS" means Indebtedness of the Company or a
Subsidiary Guarantor the proceeds of which are utilized solely to acquire
ground-based Communications Assets used or usable in a Permitted Business of the
Company or such Subsidiary Guarantor.
"VOTING STOCK" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
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"WARRANT REGISTRATION RIGHTS AGREEMENT " the registration rights
agreement, dated as of March 31, 1998, by and among Holdings and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person and one
or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"AFFILIATE TRANSACTION"...........................4.11
"ASSET SALE"......................................4.10
"ASSET SALE OFFER"................................3.09
"BANKRUPTCY LAW".................................4.01
"CHANGE OF CONTROL OFFER".........................4.15
"CHANGE OF CONTROL PAYMENT".......................4.15
"CHANGE OF CONTROL PAYMENT DATE"..................4.15
"COVENANT DEFEASANCE".............................8.03
"EVENT OF DEFAULT"................................6.01
"EXCESS PROCEEDS".................................4.10
"INCUR"...........................................4.09
"LEGAL DEFEASANCE"................................8.02
"NOTE AUTHENTICATION ORDER".......................2.02
"OFFER AMOUNT"....................................3.09
"OFFER PERIOD"....................................3.09
"PAYING AGENT"....................................2.03
"PERMITTED INDEBTEDNESS"..........................4.09
"PURCHASE DATE"...................................3.09
"REGISTRAR".......................................2.03
"RESTRICTED PAYMENTS".............................4.07
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
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"INDENTURE SECURITIES" means the Notes;
"INDENTURE SECURITY HOLDER" means a Holder of a Note;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee; and
"OBLIGOR" on the Notes and the Note Guarantees means the Company and
the Guarantors, respectively, and any successor obligor upon the Notes and the
Note Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of successor sections or
rules adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibits A1 and A2 hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes
shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound
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thereby. However, to the extent any provision of any Note conflicts with the
express provisions of this Indenture, the provisions of this Indenture shall
govern and be controlling.
(b) Global Notes.
Notes issued in global form shall be substantially in the form of
Exhibits A1 or A2 attached hereto (including the Global Note Legend thereon and
the "Schedule of Exchanges of Interests in the Global Note" attached thereto).
Notes issued in definitive form shall be substantially in the form of Exhibit A1
attached hereto (but without the Global Note Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Note" attached thereto). Each
Global Note shall represent such of the outstanding Notes as shall be specified
therein and each shall provide that it shall represent the aggregate principal
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate principal amount of outstanding Notes represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the aggregate principal amount of outstanding Notes
represented thereby shall be made by the Trustee or the Note Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes.
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, at its New York office, as custodian for the Depositary, and registered
in the name of the Depositary or the nominee of the Depositary for the accounts
of designated agents holding on behalf of Euroclear or Cedel Bank, duly executed
by the Company and authenticated by the Trustee as hereinafter provided. The
Restricted Period shall be terminated upon the receipt by the Trustee of (i) a
written certificate from the Depositary, together with copies of certificates
from Euroclear and Cedel Bank certifying that they have received certification
of non-U.S. beneficial ownership of 100% of the aggregate principal amount of
the Regulation S Temporary Global Note (except to the extent of any beneficial
owners thereof who acquired an interest therein during the Restricted Period
pursuant to another exemption from registration under the Securities Act and who
will take delivery of a beneficial ownership interest in a 144A Global Note or
an IAI Global Note bearing a Private Placement Legend, all as contemplated by
Section 2.06(g)(i) hereof), and (ii) an Officers' Certificate from the Company.
Following the termination of the Restricted Period, beneficial interests in the
Regulation S Temporary Global Note shall be exchanged for beneficial interests
in Regulation S Permanent Global Notes pursuant to the Applicable Procedures.
Simultaneously with the authentication of Regulation S Permanent Global Notes,
the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate
principal amount of the Regulation S Temporary Global Note and the Regulation S
Permanent Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its
nominee, as the case may be, in connection with transfers of interest as
hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in the Regulation S Temporary
Global Note and the Regulation S Permanent Global Notes that are held by
Participants through Euroclear or Cedel Bank.
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SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "NOTE AUTHENTICATION ORDER"), authenticate Notes for original issue
up to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("REGISTRAR") and an
office or agency where Notes may be presented for payment ("PAYING AGENT"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall
notify the Trustee in writing of the name and address of any Agent not a party
to this Indenture. If the Company fails to appoint or maintain another entity
as Registrar or Paying Agent, the Trustee shall act as such. The Company or any
of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying
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Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent. Upon any bankruptcy or
reorganization proceedings relating to the Company, the Trustee shall serve as
Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA (S) 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes.
A Global Note may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. All Global Notes will be exchanged by the Company for Definitive
Notes if (i) the Company delivers to the Trustee notice from the Depositary that
it is unwilling or unable to continue to act as Depositary or that it is no
longer a clearing agency registered under the Exchange Act and, in either case,
a successor Depositary is not appointed by the Company within 120 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion determines that the Global Notes (in whole but not in part) should be
exchanged for Definitive Notes and delivers a written notice to such effect to
the Trustee; provided that in no event shall the Regulation S Temporary Global
Note be exchanged by the Company for Definitive Notes prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar of any
certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities
Act. Upon the occurrence of either of the preceding events in (i) or (ii)
above, Definitive Notes shall be issued in such names as the Depositary shall
instruct the Trustee. Global Notes also may be exchanged or replaced, in whole
or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note
authenticated and delivered in exchange for, or in lieu of, a Global Note or any
portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof,
shall be authenticated and delivered in the form of, and shall be, a Global
Note. A Global Note may not be exchanged for another Note other than as
provided in this Section 2.06(a), however, beneficial interests in a Global Note
may be transferred and exchanged as provided in Section 2.06(b),(c) or (f)
hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof
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in the form of a beneficial interest in the same Restricted Global Note in
accordance with the transfer restrictions set forth in the Private
Placement Legend; provided, however, that prior to the expiration of the
Restricted Period, transfers of beneficial interests in the Temporary
Regulation S Global Note may not be made to a U.S. Person or for the
account or benefit of a U.S. Person (other than an Initial Purchaser).
Beneficial interests in any Unrestricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
an Unrestricted Global Note. No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers described
in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor
of such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause
to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer
or exchange referred to in (1) above; provided that in no event shall
Definitive Notes be issued upon the transfer or exchange of beneficial
interests in the Regulation S Temporary Global Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar of
any certificates required pursuant to Rule 903 under the Securities Act.
Upon consummation of an Exchange Offer by the Company in accordance with
Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall
be deemed to have been satisfied upon receipt by the Registrar of the
instructions contained in the Letter of Transmittal delivered by the Holder
of such beneficial interests in the Restricted Global Notes. Upon
satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture and the
Notes or otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the
Regulation S Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and
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(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications and certificates and Opinion of Counsel required by
item (3) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in the Unrestricted Global
Note. A beneficial interest in any Restricted Global Note may be exchanged
by any holder thereof for a beneficial interest in an Unrestricted Global
Note or transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Debt Registration Rights
Agreement and the holder of the beneficial interest to be transferred,
in the case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal or via the
Depositary's book-entry system that it is not (1) a broker-dealer, (2)
a Person participating in the distribution of the Exchange Notes or
(3) a Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Debt Registration Rights
Agreement;
(C) such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Debt Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of a Note
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Authentication Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate principal
amount equal to the aggregate principal amount of beneficial interests
transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a Restricted Definitive Note, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in item
(2)(a) thereof;
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903
or Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
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the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and, upon receipt of a Note Authentication
Order, the Trustee shall authenticate and deliver to the Person designated
in the instructions a Definitive Note in the appropriate principal amount.
Any Definitive Note issued in exchange for a beneficial interest in a
Restricted Global Note pursuant to this Section 2.06(c) shall be registered
in such name or names and in such authorized denomination or denominations
as the holder of such beneficial interest shall instruct the Registrar
through instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive Note
issued in exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend
and shall be subject to all restrictions on transfer contained therein.
Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may not be
exchanged for a Definitive Note or transferred to a Person who takes
delivery thereof in the form of a Definitive Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar of
any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the
Securities Act, except in the case of a transfer pursuant to an exemption
from the registration requirements of the Securities Act other than Rule
903 or Rule 904.
(v) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Debt Registration Rights
Agreement and the holder of such beneficial interest, in the case of
an exchange, or the transferee, in the case of a transfer, certifies
in the applicable Letter of Transmittal that it is not (1) a broker-
dealer, (2) a Person participating in the distribution of the Exchange
Notes or (3) a Person who is an affiliate (as defined in Rule 144) of
the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Debt Registration Rights
Agreement;
(C) such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Debt Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(b)
thereof; or
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(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a Definitive Note that does not bear the Private Placement
Legend, a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with the
Securities Act.
(vi) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in
an Unrestricted Global Note proposes to exchange such beneficial interest
for a Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the
Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and, upon receipt of a Note Authentication Order, the
Trustee shall authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant to
this Section 2.06(c)(iii) shall be registered in such name or names and in
such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions from
the Depositary and the Participant or Indirect Participant. The Trustee
shall deliver such Definitive Notes to the Persons in whose names such
Notes are so registered. Any Definitive Note issued in exchange for a
beneficial interest pursuant to this Section 2.06(c)(iii) shall not bear
the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a Restricted
Global Note or to transfer such Restricted Definitive Notes to a Person who
takes delivery thereof in the form of a beneficial interest in a Restricted
Global Note, then, upon receipt by the Registrar of the following
documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred
to a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred
to a Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under
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the Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred
to an Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other than
those listed in subparagraphs (B) through (D) above, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item
(3) thereof, if applicable;
(F) if such Restricted Definitive Note is being transferred
to the Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note, in the case of clause (c) above, the
Regulation S Global Note, and in all other cases, the IAI Global Note.
(vii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Restricted Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note
only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Debt Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Debt Registration Rights
Agreement;
(C) such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Debt Registration Rights Agreement; or
(D) the Registrar receives the following:
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(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in item (1)(c)
thereof; or
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof
in the form of a beneficial interest in the Unrestricted Global
Note, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with the
Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Definitive Notes to a Person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global Note at any
time. Upon receipt of a request for such an exchange or transfer, the
Trustee shall cancel the applicable Unrestricted Definitive Note and
increase or cause to be increased the aggregate principal amount of one of
the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D)
or (iii) above at a time when an Unrestricted Global Note has not yet been
issued, the Company shall issue and, upon receipt of a Note Authentication
Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate
principal amount equal to the principal amount of Definitive Notes so
transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's
compliance with the provisions of this Section 2.06(e), the Registrar shall
register the transfer or exchange of Definitive Notes. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Notes duly endorsed or accompanied by
a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing. In
addition, the requesting Holder shall provide any additional certifications,
documents and information, as applicable, required pursuant to the following
provisions of this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes.
Any Restricted Definitive Note may be transferred to and registered in the
name of Persons who take
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delivery thereof in the form of a Restricted Definitive Note if the
Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under
the Securities Act, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act,
then the transferor must deliver a certificate in the form of Exhibit
B hereto, including the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person or
Persons who take delivery thereof in the form of an Unrestricted Definitive
Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Debt Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Debt Registration Rights
Agreement;
(C) any such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Debt Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive Note,
a certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or
transfer is in compliance with the Securities
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Act and that the restrictions on transfer contained herein and in
the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a transfer,
the Registrar shall register the Unrestricted Definitive Notes pursuant to
the instructions from the Holder thereof.
(f) Exchange Offer.
Upon the occurrence of the Exchange Offer in accordance with the Debt
Registration Rights Agreement, the Company shall issue and, upon receipt of a
Note Authentication Order in accordance with Section 2.02, the Trustee shall
authenticate (i) one or more Unrestricted Global Notes in an aggregate principal
amount equal to the principal amount of the beneficial interests in the
Restricted Global Notes tendered for acceptance by Persons that certify in the
applicable Letters of Transmittal that (x) they are not broker-dealers, (y) they
are not participating in a distribution of the Exchange Notes and (z) they are
not affiliates (as defined in Rule 144) of the Company, and accepted for
exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate
principal amount equal to the principal amount of the Restricted Definitive
Notes accepted for exchange in the Exchange Offer. Concurrently with the
issuance of such Notes, the Trustee shall cause the aggregate principal amount
of the applicable Restricted Global Notes to be reduced accordingly, and the
Company shall execute and, upon receipt of a Note Authentication Order, the
Trustee shall authenticate and deliver to the Persons designated by the Holders
of Definitive Notes so accepted Definitive Notes in the appropriate principal
amount.
(g) Legends
The following legends shall appear on the face of all Global Notes and
Definitive Notes issued under this Indenture unless specifically stated
otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each
Global Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION
IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
(A) OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY ONLY (1) TO
HOLDINGS, (2) PURSUANT TO A REGISTRATION STATEMENT WHICH
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HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (3) TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (4) PURSUANT
TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF REGULATION
S UNDER THE SECURITIES ACT, (5) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT (AN "IAI") THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE, AND, IN THE CASE OF ANY TRANSFER TO ANY IAI OF SECURITIES WHICH
ARE AN AGGREGATE PRINCIPAL AMOUNT OF $100,000 OR LESS, AN OPINION OF
COUNSEL IF HOLDINGS SO REQUESTS OR (6) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT (AND
BASED ON AN OPINION OF COUNSEL IF HOLDINGS SO REQUESTS), SUBJECT IN EACH OF
THE FOREGOING CASES TO APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THAT IT WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF
THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii),
(c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section
2.06 (and all Notes issued in exchange therefor or substitution
thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend
in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF
THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER
ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS
HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II)
THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO
SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED
TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE
AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH
THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The Regulation
S Temporary Global Note shall bear a legend in substantially the following
form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE,
AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED
NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE
HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE
SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."
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(h) Cancellation and/or Adjustment of Global Notes.
At such time as all beneficial interests in a particular Global Note
have been exchanged for Definitive Notes or a particular Global Note has been
redeemed, repurchased or canceled in whole and not in part, each such Global
Note shall be returned to or retained and canceled by the Trustee in accordance
with Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a Person
who will take delivery thereof in the form of a beneficial interest in another
Global Note or for Definitive Notes, the principal amount of Notes represented
by such Global Note shall be reduced accordingly and an endorsement shall be
made on such Global Note by the Trustee or by the Depositary at the direction of
the Trustee to reflect such reduction; and if the beneficial interest is being
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note, such other Global Note
shall be increased accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depositary at the direction of the Trustee to
reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global Notes
or Definitive Notes surrendered upon such registration of transfer or
exchange.
(v) The Company shall not be required (A) to issue, to register
the transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business on
the day of selection, (B) to register the transfer of or to exchange any
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part or (c) to register the transfer
of or to exchange a Note between a record date and the next succeeding
Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer
of any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of
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principal of and interest on such Notes and for all other purposes, and
none of the Trustee, any Agent or the Company shall be affected by notice
to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
SECTION 2.07. REPLACEMENT NOTES
If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of a
Note Authentication Order, shall authenticate a replacement Note if the
Trustee's requirements are met. If required by the Trustee or the Company, an
indemnity bond must be supplied by the Holder that is sufficient in the judgment
of the Trustee and the Company to protect the Company, the Trustee, any Agent
and any authenticating agent from any loss that any of them may suffer if a Note
is replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
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SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of a Note Authentication
Order, shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of certificated Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and, upon receipt of a Note Authentication Order, the Trustee shall authenticate
definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it
has paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee
in writing of the amount of defaulted interest proposed to be paid on each Note
and the date of the proposed payment. The Company shall fix or cause to be
fixed each such special record date and payment date, provided that no such
special record date shall be less than 10 days prior to the related payment date
for such defaulted interest. At least 15 days before the special record date,
the Company (or, upon the written request of the Company, the Trustee in the
name and at the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related payment date
and the amount of such interest to be paid.
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ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof and paragraph 5 of the Notes, it
shall furnish to the Trustee, at least 30 days but not more than 60 days before
a redemption date, an Officers' Certificate setting forth (i) the clause of this
Indenture pursuant to which the redemption shall occur, (ii) the redemption
date, (iii) the principal amount of Notes to be redeemed, (iv) the redemption
price and (v) the CUSIP numbers of the Notes to be redeemed.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate. In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed, including the
CUSIP numbers, and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption
date upon surrender of such Note, a new Note or Notes in principal amount
equal to the unredeemed portion shall be issued upon cancellation of the
original Note;
(d) the name and address of the Paying Agent;
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(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on
the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
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SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the Notes
shall not be subject to redemption at the Company's option prior to April 1,
2003. The Notes shall be subject to redemption at any time at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the applicable redemption date, if redeemed during the twelve-month
period beginning on April 1 of the years indicated below:
YEAR PERCENTAGE
---- ----------
2003..................................... 106.125%
2004..................................... 104.083%
2005..................................... 102.042%
2006 and thereafter...................... 100.000%
(b) Notwithstanding the foregoing, during the first 36 months after
the date hereof, the Company may redeem up to 35% of the aggregate principal
amount of Notes originally issued hereunder at a redemption price of 112.25% of
the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the redemption date, with the net cash proceeds to
the Company of an Equity Offering; provided that (i) at least $217.8 million in
aggregate principal amount of the Notes remain outstanding immediately after the
occurrence of each such redemption (excluding Notes held by the Company and its
Subsidiaries) and (ii) each such redemption shall occur within 45 days after the
date of the closing of any such Equity Offering.
(c) Any redemption pursuant to this Section 3.07 and paragraph 5 of
the Notes shall be made pursuant to the provisions of Section 3.01 through 3.06
hereof.
SECTION 3.08. MANDATORY REDEMPTION.
The Company shall not be required to make mandatory redemption
payments with respect to the Notes, except as set forth in Section 4.15.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to all Holders to purchase Notes (an "ASSET
SALE OFFER"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "OFFER PERIOD"). No later than
five Business Days after the termination of the Offer Period (the "PURCHASE
DATE"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "OFFER AMOUNT") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note
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is registered at the close of business on such record date, and no additional
interest shall be payable to Holders who tender Notes pursuant to the Asset Sale
Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale
Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any
Note accepted for payment pursuant to the Asset Sale Offer shall cease to
accrete or accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may only elect to have all of such Note purchased and may
not elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to
any Asset Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer by book-entry transfer, to the Company, a
depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if
the Company, the depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Note the Holder delivered for purchase
and a statement that such Holder is withdrawing his election to have such
Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered
by Holders exceeds the Offer Amount, the Company shall select the Notes to
be purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions
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thereof were accepted for payment by the Company in accordance with the terms of
this Section 3.09. The Company, the Depositary or the Paying Agent, as the case
may be, shall promptly (but in any case not later than five days after the
Purchase Date) mail or deliver to each tendering Holder an amount equal to the
purchase price of the Notes tendered by such Holder and accepted by the Company
for purchase, and the Company shall promptly issue a new Note, and the Trustee,
upon written request from the Company shall authenticate and mail or deliver
such new Note to such Holder, in a principal amount equal to any unpurchased
portion of the Note surrendered. Any Note not so accepted shall be promptly
mailed or delivered by the Company to the Holder thereof. The Company shall
publicly announce the results of the Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company or a Guarantor shall pay or cause to be paid the principal
of, premium, if any, and interest and Liquidated Damages, if any, on the Notes
on the dates and in the manner provided in the Notes. Principal, premium, if
any, and interest and Liquidated Damages, if any, shall be considered paid on
the date due if the Paying Agent, if other than the Company or a Subsidiary
thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by
the Company in immediately available funds and designated for and sufficient to
pay all principal, premium, if any, and interest and Liquidated Damages, if any,
then due. The Company shall pay all Liquidated Damages, if any, in the same
manner on the dates and in the amounts set forth in the Debt Registration Rights
Agreement.
The Company or a Guarantor shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to 1% per annum in excess of the then applicable interest rate on the
Notes to the extent lawful; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest and Liquidated Damages (without regard to any applicable grace period)
at the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give
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prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Company shall furnish to
the Trustee and the Holders of Notes (i) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if the Company were required to file such
forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information only, a
report thereon by the Company's certified independent accountants and (ii) all
current reports that would be required to be filed with the Commission on Form
8-K if the Company were required to file such reports, in each case within the
time periods specified in the Commission's rules and regulations. For so long
as Holdings is a guarantor of the Notes, the Company may satisfy its obligations
in this covenant with respect to financial information relating to the Company
by furnishing financial information relating to Holdings; provided that the same
is accompanied by consolidated financial information of the Company on a stand-
alone basis that explains in reasonable detail the differences between the
information relating to Holdings, on the one hand, and the information relating
to the Company on a stand-alone basis, on the other hand. In addition,
following the consummation of the exchange offer contemplated by the Debt
Registration Rights Agreement, whether or not required by the rules and
regulations of the Commission, the Company shall file a copy of all such
information and reports with the Commission for public availability within the
time periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information reasonably
available to securities analysts and prospective investors upon request. The
Company shall at all times comply with TIA (S) 314(a).
(b) For so long as any Notes remain outstanding, Holdings, the Company
and the Guarantors shall furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company and each Guarantor (to the extent that such Guarantor
is so required under the TIA) shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
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(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company and each of the Guarantors covenants (to the extent that
it may lawfully do so) that it shall not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Company and each of the Guarantors (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly: (i) declare or pay any dividend or make any other
payment or distribution on account of the Company's or any of its Subsidiaries'
Equity Interests (including, without limitation, any payment in connection with
any merger or consolidation involving the Company or any of its Subsidiaries) or
to the direct or indirect holders of the Company's or any of its Subsidiaries'
Equity Interests in their capacity as such (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of the
Company or to the Company or a Subsidiary of the Company); (ii) purchase, redeem
or otherwise acquire or retire for value (including, without limitation, in
connection with any merger or consolidation involving the Company) any Equity
Interests of the Company or any direct or indirect parent of the Company or
other Affiliate of the Company (other than any such Equity Interests owned by
the Company or any Wholly Owned Subsidiary of the Company); (iii) make any
payment on or with respect to, or purchase, redeem, defease or otherwise acquire
or retire for value any Indebtedness that is subordinated to the Notes, except a
payment of interest or principal at Stated Maturity; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above
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being collectively referred to as "RESTRICTED PAYMENTS"), unless, at the time of
and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the Reference Period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Debt to
Cash Flow Ratio test set forth in the first paragraph of Section 4.09
hereof; and
(c) such Restricted Payment, together with the aggregate amount
of all other Restricted Payments made by the Company and its Subsidiaries
after the date hereof (excluding Restricted Payments permitted by clauses
(ii), (iii) and (iv) of the next succeeding paragraph), is less than the
sum, without duplication, of (i) 50% of the Consolidated Net Income of the
Company for the period (taken as one accounting period) from the beginning
of the first fiscal quarter commencing after the date hereof to the end of
the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment
(or, if such Consolidated Net Income for such period is a deficit, less
100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds
received by the Company since the date hereof as a contribution to its
common equity capital or from the issue or sale of Equity Interests of the
Company (other than Disqualified Stock) or from the issue or sale of
Disqualified Stock or debt securities of the Company that have been
converted into such Equity Interests (other than Equity Interests (or
Disqualified Stock or convertible debt securities) sold to a Subsidiary of
the Company), plus (iii) to the extent that any Restricted Investment that
was made after the date hereof is sold for cash or otherwise liquidated or
repaid for cash, the lesser of (A) the cash return of capital with respect
to such Restricted Investment (less the cost of disposition, if any) and
(B) the initial amount of such Restricted Investment.
The foregoing provisions will not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Subsidiary of the Company) of, other Equity Interests of
the Company (other than any Disqualified Stock); provided that the amount of any
such net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause (c)
(ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase or
other acquisition of subordinated Indebtedness with the net cash proceeds from
an incurrence of Permitted Refinancing Indebtedness; (iv) the payment of any
dividend by a Subsidiary of the Company to the holders of its common Equity
Interests on a pro rata basis; (v) from and after April 1, 2001 the payment of
dividends to Holdings the proceeds of which are used to satisfy interest expense
obligations of Holdings under the Term Loan Facility, as in effect on the date
hereof; provided that (x) no Default or Event of Default shall have occurred and
be continuing immediately before or immediately after such transaction and (y)
the aggregate amount of such payments does not exceed the sum of (1) $6.5
million and (2) the difference between (A) the Company's Cumulative Consolidated
Cash Flow from and after April 1, 2001 and (B) 1.75 times Consolidated Interest
Expense accrued on a cumulative basis from and after April 1, 2001; (vi) the
payment of dividends to Holdings the proceeds of which are used to satisfy
ordinary course administrative expenses
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of Holdings, but in no event to exceed, (together with all payments made
pursuant to management agreements), $2.0 million in any given fiscal year; (vii)
the payment of any dividend required pursuant to the Tax Sharing Agreement
between the Company and Holdings, as such is in effect on the date hereof and
(viii) other Investments in any Person (other than Holdings or an Affiliate of
Holdings that is not also a Subsidiary of the Company) having an aggregate fair
market value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (viii) that are at the time
outstanding, not to exceed the greater of (x) $10.0 million and (y) 2.5% of the
Consolidated Tangible Net Worth of the Company at such time.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the Board
of Directors whose resolution with respect thereto shall be delivered to the
Trustee, such determination to be based upon an opinion or appraisal issued by
an accounting, appraisal or investment banking firm of national standing if such
fair market value exceeds $5.0 million. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by the covenant "Restricted
Payments" were computed, together with a copy of any fairness opinion or
appraisal required by this Indenture.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any Subsidiary
to (i)(a) pay dividends or make any other distributions to the Company or any of
its Subsidiaries (1) on its Capital Stock or (2) with respect to any other
interest or participation in, or measured by, its profits, or (b) pay any
indebtedness owed to the Company or any of its Subsidiaries, (ii) make loans or
advances to the Company or any of its Subsidiaries or (iii) transfer any of its
properties or assets to the Company or any of its Subsidiaries. However, the
foregoing restrictions will not apply to encumbrances or restrictions existing
under or by reason of (a) Existing Indebtedness as in effect on the date hereof,
(b) the Revolving Credit Facility as in effect on the date hereof, and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive, taken as a whole, with
respect to such dividend and other payment restrictions than those contained in
the Revolving Credit Facility as in effect on the date hereof, (c) this
Indenture and the Notes, (d) applicable law, (e) any instrument governing
Indebtedness or Capital Stock of a Person acquired by the Company or any of its
Subsidiaries as in effect at the time of such acquisition (except to the extent
such Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this Indenture to
be incurred, (f) customary non-assignment provisions in leases entered into in
the ordinary course of business and consistent with past practices, (g) purchase
money obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (iii) above on the
property so acquired, (h) any agreement for the sale of a Subsidiary that
restricts distributions by that Subsidiary pending its sale, (i) Permitted
Refinancing Indebtedness, provided that the restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness are no
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more restrictive, taken as a whole, than those contained in the agreements
governing the Indebtedness being refinanced, (j) secured Indebtedness otherwise
permitted to be incurred pursuant to the provisions of Section 4.12 hereof that
limit the right of the debtor to dispose of the assets securing such
Indebtedness, (k) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements and other similar agreements
entered into in the ordinary course of business and (l) restrictions on cash or
other deposits or net worth imposed by customers under contracts entered into in
the ordinary course of business.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "INCUR") any Indebtedness (including Acquired Indebtedness) and
the Company will not issue any Disqualified Stock and will not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company may incur Indebtedness (including Acquired Indebtedness) or issue shares
of Disqualified Stock if the Company's Debt to Cash Flow Ratio at the time of
incurrence of such Indebtedness or the issuance of such Disqualified Stock,
after giving pro forma effect to such incurrence or issuance as of such date and
to the use of proceeds therefrom as if the same had occurred at the beginning of
the most recently ended Reference Period of the Company for which internal
financial statements are available, would have been no greater than 4.0 to 1.0.
The Company shall not incur any Indebtedness that is contractually
subordinated in right of payment to any other Indebtedness of the Company unless
such Indebtedness is also contractually subordinated in right of payment to the
Notes on substantially identical terms; provided, however, that no Indebtedness
of the Company shall be deemed to be contractually subordinated in right of
payment to any other Indebtedness of the Company solely by virtue of being
unsecured.
The provisions of the first paragraph of this section will not apply
to the incurrence of any of the following items of Indebtedness (collectively,
"PERMITTED INDEBTEDNESS"):
(i) the incurrence by the Company of Indebtedness (including letters of
credit, with letters of credit being deemed to have a principal amount
equal to the maximum potential liability of the Company and its
Subsidiaries thereunder) under Credit Facilities; provided that the
aggregate principal amount of all Indebtedness outstanding under all Credit
Facilities after giving effect to such incurrence does not exceed an amount
equal to the greater of (a) $100.0 million less the aggregate amount of all
Net Proceeds of Asset Sales applied to repay revolving credit Indebtedness
under a Credit Facility pursuant to Section 4.10 hereof other than Net
Proceeds received pursuant to the Satellite Lease Arrangements and (b) the
Borrowing Base at the time of such incurrence;
(ii) the incurrence by the Company and its Subsidiaries of the Existing
Indebtedness;
(iii) the incurrence by the Company of Indebtedness represented by the
Notes and the Exchange Notes and the guarantee by the Subsidiary Guarantors
thereof;
(iv) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or purchase money
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obligations, in each case incurred for the purpose of financing all or any
part of the purchase price or cost of construction or improvement of
property, plant or equipment used in the business of the Company or such
Subsidiary, in an aggregate principal amount not to exceed (subject to
clause (x) below) $17.5 million at any time outstanding;
(v) the incurrence by the Company or any of its Subsidiaries of
Indebtedness in connection with the acquisition of assets or a new
Subsidiary; provided that such Indebtedness was incurred by the prior owner
of such assets or such Subsidiary prior to such acquisition by the Company
or one of its Subsidiaries and was not incurred in connection with, or in
contemplation of, such acquisition by the Company or one of it
Subsidiaries; and provided further that the principal amount (or accreted
value, as applicable) of such Indebtedness, together with any other
outstanding Indebtedness incurred pursuant to this clause (v), does not
exceed (subject to clause (x) below) $17.5 million;
(vi) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that is either Existing Indebtedness or was
permitted by this Indenture to be incurred under the first paragraph hereof
or clauses (iii), (iv), (v) or (vi) of this paragraph;
(vii) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Wholly Owned Subsidiaries; provided, however, that (i) if the Company is
the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations with
respect to the Notes and (ii)(A) any subsequent issuance or transfer of
Equity Interests that results in any such Indebtedness being held by a
Person other than the Company or a Subsidiary thereof and (B) any sale or
other transfer of any such Indebtedness to a Person that is not either the
Company or a Wholly Owned Subsidiary thereof shall be deemed, in each case,
to constitute an incurrence of such Indebtedness by the Company or such
Subsidiary, as the case may be, that was not permitted by this clause
(vii);
(viii) the incurrence by the Company of Hedging Obligations that are
incurred for the purpose of fixing or hedging interest rate risk with
respect to any floating rate Indebtedness that is permitted by the terms of
this Indenture to be outstanding;
(ix) the guarantee by the Company or any of the Subsidiary Guarantors of
Indebtedness of the Company or a Subsidiary of the Company that was
permitted to be incurred by another provision of this covenant;
(x) the incurrence by the Company or any Subsidiary Guarantor of Vendor
Financing Indebtedness in an aggregate principal amount (or accreted value,
as applicable) not to exceed $15.0 million outstanding at anytime; and
(xi) the incurrence by the Company of additional Indebtedness in an
aggregate principal amount (or accreted value, as applicable) at any time
outstanding not to exceed $17.5 million; provided that the total amount of
Indebtedness incurred by the Company pursuant to clauses (iv), (v) and (xi)
hereof does not, in the aggregate, exceed $35.0 million.
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For purposes of determining compliance with this covenant, (a) in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness described in clauses (i) through (xi) above
or is entitled to be incurred pursuant to the first paragraph of this covenant,
the Company shall, in its sole discretion, classify such item of Indebtedness
and will only be required to include the amount and type of such Indebtedness in
one of the above clauses, and (b) an item of Indebtedness may be divided and
classified in more than one of the types of Indebtedness described herein.
Accrual of interest, accretion or amortization of original issue discount, the
payment of interest on any Indebtedness in the form of additional Indebtedness
with the same terms, and the payment of dividends on Disqualified Stock in the
form of additional shares of the same class of Disqualified Stock will not be
deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock
for purposes of this covenant.
SECTION 4.10. ASSET SALES
The Company shall not, and shall not permit any of its Subsidiaries
to, consummate an Asset Sale unless (i) the Company (or the Subsidiary, as the
case may be) receives consideration at the time of such Asset Sale at least
equal to the fair market value (evidenced by a resolution of the Board of
Directors set forth in an Officers' Certificate delivered to the Trustee) of the
assets or Equity Interests issued or sold or otherwise disposed of and (ii) at
least 75% of the consideration therefor received by the Company or such
Subsidiary is in the form of cash or Cash Equivalents; provided that the amount
of (x) any liabilities (as shown on the Company's or such Subsidiary's most
recent balance sheet), of the Company or any Subsidiary (other than contingent
liabilities and liabilities that are by their terms subordinated to the Notes or
any guarantee thereof) that are assumed by the transferee of any such assets
pursuant to a customary novation agreement that releases the Company or such
Subsidiary from further liability and (y) any securities, notes or other
obligations received by the Company or any such Subsidiary from such transferee
that are contemporaneously (subject to ordinary settlement periods) converted by
the Company or such Subsidiary into cash (to the extent of the cash received),
shall be deemed to be cash for purposes of this provision.
Within 180 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds, at its option, (a) to repay
Indebtedness under a Credit Facility, (b) to the acquisition of all of the
assets of, or all of the Voting Stock of, another Permitted Business, the making
of a capital expenditure or the acquisition of other long-term assets that are
used or useful in a Permitted Business (and the payment of related expenses) or
(c) in the case of Net Proceeds received by the Company pursuant to the
Satellite Lease Arrangements, for working capital purposes. Pending the final
application of any such Net Proceeds, the Company may temporarily reduce
revolving credit borrowings or otherwise invest such Net Proceeds in any manner
that is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that
are not applied or invested as provided in the first sentence of this paragraph
will be deemed to constitute "EXCESS PROCEEDS." When the aggregate amount of
Excess Proceeds exceeds $10.0 million, the Company will be required to make an
Asset Sale Offer to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date of purchase, in accordance
with the procedures set forth in this Indenture. To the extent that any Excess
Proceeds remain after consummation of an Asset Sale Offer, the Company may use
such Excess Proceeds for any purpose not otherwise prohibited by this Indenture.
If the aggregate principal amount of Notes tendered into such Asset Sale Offer
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
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Notwithstanding the foregoing, the Company and its Subsidiaries will
be permitted to consummate Asset Sales of Communications Assets without
complying with the first paragraph of this covenant if (x) at least 75% of the
consideration received by the Company and its Subsidiaries in respect of such
Asset Sale constitutes either Communications Assets, cash or Cash Equivalents,
and (y) any Net Proceeds received by the Company or any of its Subsidiaries in
connection with such Asset Sale are applied in accordance with the foregoing
paragraph and (z) the Company and its Subsidiaries receives consideration at the
time of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in a Officer's Certificate
delivered to the trustee, such determination to be based upon an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
national standing if such fair market value exceeds $1.0 million) of the
Communications Assets sold or otherwise disposed of.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Subsidiaries
to, make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each of the
foregoing, an "AFFILIATE TRANSACTION"), unless (i) such Affiliate Transaction is
on terms that are no less favorable to the Company or the relevant Subsidiary
than those that would have been obtained in a comparable transaction by the
Company or such Subsidiary with an unrelated Person and (ii) the Company
delivers to the Trustee (a) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate consideration in excess of
$1.0 million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (i)
above and that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million, an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national
standing. Notwithstanding the foregoing, the following items shall not be deemed
to be Affiliate Transactions: (i) reasonable fees and compensation paid to and
indemnity provisions provided on behalf of officers, directors or employees of
the Company or any of its Subsidiaries in the ordinary course of business, (ii)
transactions between or among the Company and its Subsidiaries, (iii)
transactions pursuant to agreements in effect on the Issue Date and amendments,
modifications and replacements thereof, provided that such amendments,
modifications and replacements are on terms that are fair and reasonable to the
Company and have been unanimously approved by the disinterested members of the
Board of Directors, (iv) transactions between the Company and Holdings pursuant
to the Tax Sharing Agreement, as such is in effect on the date hereof (or as
amended thereafter so long as no payment by the Company and its Subsidiaries
under any such amended Tax Sharing Agreement shall exceed the amount of the
payment that would have been permitted at such time under the Tax Sharing
Agreement as in effect on the date hereof), and (v) Restricted Payments (other
than Restricted Investments) that are permitted Section 4.07 hereof.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume or suffer to exist any Liens
on any asset now owned or hereafter acquired, or any income or profits therefrom
or assign or convey any right to receive income therefrom, except Permitted
Liens.
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SECTION 4.13. BUSINESS ACTIVITIES.
The Company shall not, and shall not permit any Subsidiary to, engage
in any business other than Permitted Businesses, except to such extent as would
not be material to the Company and its Subsidiaries taken as a whole.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company shall make
an offer (the "CHANGE OF CONTROL OFFER") to each Holder of Notes to repurchase
all or any part (equal to $1,000 or an integral multiple thereof) of such
Holder's Notes pursuant to the offer described below at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"CHANGE OF CONTROL PAYMENT"). Within ten days following any Change of Control,
the Company shall mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than 60 days from the date such notice is mailed (the
"CHANGE OF CONTROL PAYMENT DATE"), pursuant to the procedures required by this
Indenture and described in such notice. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date. Unless the Company
defaults in the payment for any Notes properly tendered pursuant to the Change
of Control Offer, any Notes accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control Payment
Date.
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(c) The Company shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth herein applicable to a Change of Control Offer made by
the Company and purchases all Notes validly tendered and not withdrawn under
such Change of Control Offer.
SECTION 4.16. MAINTENANCE OF INSURANCE.
The Company shall obtain or maintain (as applicable) in full force and
effect:
(i) in-orbit operations insurance with respect to each of MSAT-1
or MSAT-2, at all times representing the value and prior insurance
settlements of such satellite (taking into account the foregone useful life
of such satellite) and the pro rata cost of a launch vehicle, payable in
the event that such satellite ceases to be used for commercial revenue
producing service (provided that such insurance may contain customary
provisions for deductible payments and minimum thresholds for satellite
failure); provided, however, that at the time the Company is required to
procure or renew in-orbit operations insurance with respect to MSAT-1 or
MSAT-2, the Company may reduce the amount to be insured by (x) the amount
of cash, Cash Equivalents and short-term investments (amounts allocated or
expected to be allocated for capital expenditures or working capital
requirements), currently available to the Company to construct a
Replacement Satellite as determined in good faith by the Board of Directors
of the Company (evidenced by a resolution approved by at least a majority
of the Board of Directors of the Company and set forth in an Officers'
Certificate delivered to the Trustee), and (y) the value of any long lead-
time spare parts that the Company has procured to date for any satellite
that is comparable to the technological capability of the MSAT-1 or MSAT-2
being insured, as such value is determined in good faith by the Board of
Directors of the Company (evidenced by a resolution approved by at least a
majority of the Board of Directors of the Company and set forth in an
Officers' Certificate delivered to the Trustee), provided further that any
insurance maintained by the Company will reflect the rights of the lessee
or purchaser under the terms of any Satellite Lease Arrangements.
(ii) launch and in-orbit checkout insurance with respect to each
Replacement Satellite, which insurance shall be procured promptly prior to
the launch of each such satellite and shall be in effect on the launch date
and remain in effect through the launch and the initial check-out period of
such Replacement Satellite, in an amount sufficient to provide for the
construction, launch and insurance of a Replacement Satellite to be payable
in the event of a launch or satellite failure during the initial check-out
period; provided, however, that at the time the Company is required to
procure launch and in-orbit check-out insurance with respect to a
Replacement Satellite, the Company may reduce the amount to be insured if
another Replacement Satellite is fully operational, is being used in
commercial service and is insured in accordance with clause (i) above, by
(x) the amount of cash, cash equivalents and short-term investments
currently available to the Company to construct a Replacement Satellite as
determined in good faith by the Board of Directors of the Company
(evidenced by a resolution approved by at least a majority of the Board of
Directors of the Company and set forth in an Officers' Certificate
delivered to the Trustee), and (y) the value of any long lead-time spare
parts that the Company has procured to date for any satellite that is
comparable to the technological capability of the Replacement Satellite
being insured, as such value is determined in good faith by the Board of
Directors of the Company (evidenced by a resolution approved by at least a
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majority of the Board of Directors of the Company and set forth in an
Officers' Certificate delivered to the Trustee).
The obligation of the Company to maintain insurance pursuant to this
covenant may be satisfied by any combination of:
(i) insurance commitments obtained from any recognized insurance
provider,
(ii) insurance commitments obtained from any entity other than an
entity referred to in clause (i) if the Board of Directors of the Company
determines in good faith (evidenced by a majority resolution of the Board
of Directors of the Company and set forth in an Officer's Certificate
delivered to the Trustee) that such entity is creditworthy and otherwise
capable of bearing the financial risk of providing such insurance and
making payments in respect of any claims on a timely basis; and
(iii) unrestricted cash segregated and maintained by the Company
in a segregated account established with an Eligible Institution (the
"INSURANCE ACCOUNT") solely for disbursement in accordance with the terms
of this covenant ("CASH INSURANCE"), and to be held in trust for the sole
and express benefit of the holders of the Notes.
Within 30 days following any date on which the Company is
required to obtain insurance pursuant to this Indenture, the Company will
deliver to the Trustee an insurance certificate certifying the amount of
insurance then carried, and in full force and effect, and an Officer's
Certificate stating that such insurance, together with any other insurance
or Cash Insurance maintained by the Company, complies with this Indenture.
In addition, the Company will cause to be delivered to the Trustee no less
than once each year an insurance certificate setting forth the amount of
insurance then carried, which insurance certificate shall entitle the
Trustee to:
(i) notice of any claim under any such insurance policy; and
(ii) at least 30 days' notice from the provider of such insurance
prior to the cancellation of any such insurance and an Officers'
Certificate that complies with the first sentence of this paragraph.
In the event that the Company maintains any Cash Insurance in
satisfaction of any part of their obligation to maintain insurance pursuant to
this covenant, the Company shall deliver, in lieu of any insurance certificate
otherwise required by this covenant, an Officers' Certificate to the Trustee
certifying the amount of such Cash Insurance.
In the event that the Company receives any proceeds of any insurance
that it is required to maintain pursuant to this covenant, the Company shall
promptly deposit such proceeds into an escrow account established with an
Eligible Institution for such purpose. If the Company maintains any Cash
Insurance in satisfaction of any part of its obligation to maintain insurance
pursuant to this covenant, the Company shall transfer the cash maintained in the
Insurance Account to such escrow account upon the occurrence of the event (e.g.
a launch failure) that would have entitled the Company to the payment of
insurance had the Company purchased insurance from a recognized insurance
provider. The Company may use monies on deposit in such escrow account for the
design, development, construction,
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procurement, launch and insurance of any Replacement Satellite if: (i) the
Company delivers to the Trustee a certificate of the Company's President
certifying that such Replacement Satellite is comparable to the technological
capability of the satellite being replaced, (ii) within 30 days following the
receipt of such insurance proceeds, the Company delivers to the Trustee an
Officers' Certificate certifying that (A) the Company will use its reasonable
best efforts to ensure that such Replacement Satellites are launched within 24
months following delivery from the escrow account of such insurance proceeds;
and (B) the Company will have sufficient funds to service the Company's
projected debt service requirements until the scheduled launch of such
Replacement Satellite and to develop, construct, launch and insure such
Replacement Satellite.
SECTION 4.17. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its Subsidiaries
to, enter into any sale and leaseback transaction; provided that the Company may
enter into a sale and leaseback transaction if (i) the Company could have (a)
incurred Indebtedness in an amount equal to the Attributable Indebtedness
relating to such sale and leaseback transaction pursuant to the Debt to Cash
Flow Ratio test set forth in Section 4.09 hereof and (b) incurred a Lien to
secure such Indebtedness pursuant Section 4.12 hereof, (ii) the gross cash
proceeds of such sale and leaseback transaction are at least equal to the fair
market value (as determined in good faith by the Board of Directors and set
forth in an Officers' Certificate delivered to the Trustee) of the property that
is the subject of such sale and leaseback transaction and (iii) the transfer of
assets in such sale and leaseback transaction is permitted by, and the Company
applies the proceeds of such transaction in compliance with Section 4.10 hereof.
SECTION 4.18. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF WHOLLY
OWNED SUBSIDIARIES.
The Company (i) shall not, and shall not permit any Wholly Owned
Subsidiary of the Company to, transfer, convey, sell, lease or otherwise dispose
of any Equity Interests in any Wholly Owned Subsidiary of the Company to any
Person (other than the Company or a Wholly Owned Subsidiary of the Company),
unless (a) such transfer, conveyance, sale, lease or other disposition is of all
the Equity Interests in such Wholly Owned Subsidiary and (b) the cash Net
Proceeds from such transfer, conveyance, sale, lease or other disposition are
applied in accordance Section 4.10 hereof and (ii) shall not permit any Wholly
Owned Subsidiary of the Company to issue any of its Equity Interests (other
than, if necessary, shares of its Capital Stock constituting directors'
qualifying shares) to any Person other than to the Company or a Wholly Owned
Subsidiary of the Company.
SECTION 4.19. ADDITIONAL SUBSIDIARY GUARANTEES
If the Company or any of its Subsidiaries shall acquire or create
another Subsidiary after the date hereof, then such newly acquired or created
Subsidiary shall become a Subsidiary Guarantor and execute a Supplemental
Indenture in the form attached hereto as Exhibit F and deliver an Opinion of
Counsel and such other documents necessary and in accordance with the terms of
Article 11 and otherwise hereof.
SECTION 4.20. PAYMENTS FOR CONSENTS
The Company nor any of its Subsidiaries shall, directly or indirectly,
pay or cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Holder of any Notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of this Indenture
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or the Notes unless such consideration is offered to be paid or is paid to all
Holders of the Notes that consent, waive or agree to amend in the time frame set
forth in the solicitation documents relating to such consent, waiver or
agreement.
ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the Unit
Agreement, the Pledge Agreement, the Debt Registration Rights Agreement, the
Warrant Registration Rights Agreement and the Notes and this Indenture pursuant
to a supplemental indenture in a form reasonably satisfactory to the Trustee;
(iii) immediately after such transaction no Default or Event of Default exists;
and (iv) except in the case of a merger of the Company with or into a Wholly
Owned Subsidiary of the Company, the Company or the entity or Person formed by
or surviving any such consolidation or merger (if other than the Company), or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made (A) will have a Consolidated Net Worth immediately after
the transaction equal to or greater than the Consolidated Net Worth of the
Company immediately preceding the transaction and (B) will, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the Reference Period, be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Debt to Cash Flow Ratio
test set forth Section 4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
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ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" occurs if:
(a) the Company defaults in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes and such default continues for a
period of 30 days (whether or not prohibited, with respect to the Holdings
Guarantee, by the subordination provisions of Article 10);
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at maturity,
upon redemption (including in connection with an offer to purchase) or otherwise
(whether or not prohibited, with respect to the Holdings Guarantee, by the
subordination provisions of Article 10);
(c) the Company fails to comply with any of the provisions of Section
4.07, 4.09, 4.10 or 4.15 hereof;
(d) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture or the Notes for
60 days after notice to the Company by the Trustee or the Holders of at least
25% in aggregate principal amount of the Notes then outstanding voting as a
single class;
(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries (or
the payment of which is guaranteed by the Company or any of its Subsidiaries),
whether such Indebtedness or guarantee now exists, or is created after the date
of this Indenture, which default (a) is caused by a failure to pay principal of
or premium, if any, or interest or such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of such
Indebtedness, together with the principal amount of any other such Indebtedness
the maturity of which has been so accelerated, aggregates $5.0 million or more;
(f) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by Holdings (or the payment of which is
guaranteed by Holdings) whether such Indebtedness or guarantee now exists, or is
created after the date of this Indenture, which default (a) is a Payment Default
or (b) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness the maturity of which
has been so accelerated, aggregates $5.0 million or more;
(g) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Subsidiary and such judgment or judgments remain undischarged
for a period (during which execution shall not be effectively stayed) of 60
days, provided that the aggregate of all such undischarged judgments exceeds
$5.0 million;
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(h) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against Holdings and such
judgment or judgments remain undischarged for a period (during which execution
shall not be effectively stayed) of 60 days, provided that the aggregate of all
such undischarged judgments exceeds $5.0 million;
(i) material breach by Holdings, the Company or any Subsidiary of any
representation or warranty set forth in the Unit Agreement or the Pledge
Agreement, or material default by Holdings, the Company or any Subsidiary in the
performance of any covenant set forth in the Unit Agreement or the Pledge
Agreement, or repudiation by Holdings, the Company or any Subsidiary of its
obligations under the Unit Agreement or the Pledge Agreement or the
unenforceability of the Unit Agreement or the Pledge Agreement against Holdings,
the Company or any Subsidiary for any reason;
(j) the termination or revocation of any of the permits, licenses,
approvals, orders, certificates, franchises or authorizations of governmental or
regulatory authorities, including those relating to the Federal Communications
Act of 1934, as amended, owned or held by Holdings, the Company or any of the
Subsidiary Guarantors that are material to the Company and its Subsidiaries,
taken as a whole, (collectively, "LICENSES") or any other material impairment
occurs of the rights under any such Licenses of the holder of such License;
(k) the Company or any Guarantor:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in
an involuntary case,
(iii) consents to the appointment of a custodian of it or for all
or substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors,
or
(v) generally is not paying its debts as they become due; or
(l) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any of the Guarantors in
an involuntary case;
(ii) appoints a custodian of the Company or any of the Guarantors
for all or substantially all of the property of the Company or any of the
Guarantors; or
(iii) orders the liquidation of the Company or any of the
Guarantors;
(iv) and the order or decree remains unstayed and in effect for
60 consecutive days; or
(m) except as permitted by this Indenture, any Note Guarantee is held
in any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or
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any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under such Guarantor's Note Guarantee.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (k) or (l) of Section 6.01 hereof with respect to the Company Guarantor
or any Guarantor occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Notes may declare all the
Notes to be due and payable immediately. Notwithstanding the foregoing, if an
Event of Default specified in clause (k) or (l) of Section 6.01 hereof occurs
with respect to the Company or any Guarantor, all outstanding Notes shall be due
and payable immediately without further action or notice. The Holders of a
majority in aggregate principal amount of the then outstanding Notes by written
notice to the Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal, interest or premium that has become due solely because of the
acceleration) have been cured or waived.
If an Event of Default occurs by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding payment of the premium that the Company would have had to pay if the
Company then had elected to redeem the Notes pursuant to Section 3.07 hereof,
then, upon acceleration of the Notes, an equivalent premium shall also become
and be immediately due and payable, to the extent permitted by law, anything in
this Indenture or in the Notes to the contrary notwithstanding. If an Event of
Default occurs prior to April 1, 2003 by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding the prohibition on redemption of the Notes prior to such date, then,
upon acceleration of the Notes, a premium shall become and be immediately due
and payable in an amount, for each of the years beginning on April 1 of the
years set forth below, as set forth below (expressed as a percentage of the
aggregate principal amount to the date of payment that would otherwise be due
but for the provisions of this sentence):
YEAR PERCENTAGE
---- ----------
1998...................................116.335%
1999...................................114.293%
2000...................................112.251%
2001...................................110.209%
2002...................................108.167%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest and Liquidated Damages, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
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SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by written notice to the Trustee may on behalf of the
Holders of all of the Notes waive an existing Default or Event of Default and
its consequences hereunder, except a continuing Default or Event of Default in
the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Notes (including in connection with an offer to purchase)
(provided, however, that the Holders of a majority in aggregate principal amount
of the then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision
of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to
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purchase), or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
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Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only those
duties that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction received
by it pursuant to Section 6.05 hereof.
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(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), (c), (e) and (f) of this Section and Section 7.02.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held
in trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company or any Guarantor shall be
sufficient if signed by an Officer of the Company or Guarantor issuing such
demand, request or notice.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
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SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA (S) 313(a) (but if no event described in
TIA (S) 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA
(S) 313(b)(2). The Trustee shall also transmit by mail all reports as required
by TIA (S) 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA (S) 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company and the Guarantors shall pay to the Trustee from time to
time reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company and the Guarantors
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company and the Guarantors shall indemnify the Trustee against any
and all losses, liabilities or expenses incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
the Company and the Guarantors (including this Section 7.07) and defending
itself against any claim (whether asserted by the Company and the Guarantors or
any Holder or any other person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee
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shall notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company
and the Guarantors of its obligations hereunder. The Company shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
The obligations of the Company and the Guarantors under this Section
7.07 shall survive the satisfaction and discharge of this Indenture.
To secure the Company's and the Guarantors' payment obligations in
this Section, the Trustee shall have a Lien prior to the Notes on all money or
property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(k) or (l) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to
the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in
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principal amount of the then outstanding Notes may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA
(S) 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
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Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes and to
have each Guarantor's obligation discharged with respect to its Note Guarantee
on the date the conditions set forth below are satisfied (hereinafter, "LEGAL
DEFEASANCE"). For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders
of outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest and Liquidated Damages, if any,
on such Notes when such payments are due, (b) the Company's obligations with
respect to such Notes under Article 2 and Section 4.02 hereof, (c) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (d) this Article 8. Subject to
compliance with this Article 8, the Company may exercise its option under this
Section 8.02 notwithstanding the prior exercise of its option under Section 8.03
hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and each Guarantor shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from their obligations under the covenants contained in Sections 4.07,
4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19 and 4.20 hereof
with respect to the outstanding Notes on and after the date the conditions set
forth in Section 8.04 are satisfied (hereinafter, "COVENANT DEFEASANCE"), and
the Notes shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to
the outstanding Notes, the Company and each Guarantor may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 hereof of the option applicable to this
Section 8.03 hereof, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, Sections 6.01(d) through 6.01(m) hereof shall not
constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
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(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium and Liquidated Damages, if any,
and interest on the outstanding Notes on the stated date for payment thereof or
on the applicable redemption date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a particular
redemption date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness all or a portion of the proceeds
of which will be used to defease the Notes pursuant to this Article 8
concurrently with such incurrence) or insofar as Sections 6.01(k) or 6.01(l)
hereof is concerned, at any time in the period ending on the 91st day after the
date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel (which may be subject to customary exceptions) to the effect that on the
91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
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SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"TRUSTEE") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company and the Guarantors shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against the cash or
non-callable Government Securities deposited pursuant to Section 8.04 hereof or
the principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of the
outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance
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with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that,
if the Company makes any payment of principal of, premium, if any, or interest
on any Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture, the Note
Guarantees or the Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in
place of certificated Notes or to alter the provisions of Article 2 hereof
(including the related definitions) in a manner that does not materially
adversely affect any Holder;
(c) to provide for the assumption of the Company's or a
Guarantor's obligations to the Holders of the Notes by a successor to the
Company or a Guarantor pursuant to Article 5, Article 11 or Article 12
hereof;
(d) to make any change that would provide any additional rights
or benefits to the Holders of the Notes or that does not adversely affect
the legal rights hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA; or
(f) to allow any Guarantor to execute a supplemental indenture
and/or a Note Guarantee with respect to the Notes.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and the Guarantors in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and
4.15 hereof) , the Note Guarantees and the Notes may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the Notes then outstanding voting as a single class (including consents obtained
in connection with a tender offer or exchange offer for, or purchase of, the
Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or
Event of Default (other than a Default or Event of Default
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in the payment of the principal of, premium, if any, or interest on the Notes,
except a payment default resulting from an acceleration that has been rescinded)
or compliance with any provision of this Indenture, the Note Guarantees or the
Notes may be waived with the consent of the Holders of a majority in principal
amount of the then outstanding Notes voting as a single class (including
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Notes). Section 2.08 hereof shall determine which Notes are
considered to be "outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver under this Section 9.02 may not
(with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any
Note or alter or waive any of the provisions with respect to the redemption
of the Notes except as provided above with respect to Sections 3.09, 4.10
and 4.15 hereof;
(c) reduce the rate of or change the time for payment of
interest, including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest or Liquidated Damages, if any,
on the Notes (except a rescission of acceleration of the Notes by the
Holders of at least a majority in aggregate principal amount of the then
outstanding Notes and a waiver of the payment default that resulted from
such acceleration;
(e) make any Note payable in money other than that stated in the
Notes;
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(f) make any change in the provisions of this Indenture relating
to waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or premium, interest or Liquidated Damages, if
any, on the Notes;
(g) waive a redemption payment with respect to any Note (other
than a payment required by either of Section 4.10 or 4.15 hereof);
(h) release any Guarantor from any of its obligations under its
Note Guarantee or this Indenture, except in accordance with the terms of
this Indenture; or
(i) make any change in the foregoing amendment and waiver
provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of a Note
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 13.04 hereof, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
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ARTICLE 10.
SUBORDINATION OF HOLDINGS GUARANTEE
SECTION 10.01. AGREEMENT TO SUBORDINATE.
Holdings agrees, and each Holder by accepting a Note agrees, that the
Obligations of Holdings with respect to its Holdings Guarantee is subordinated
in right of payment, to the extent and in the manner provided in this Article
10, to the prior payment in full of all Senior Indebtedness of Holdings (whether
outstanding on the date hereof or hereafter created, incurred, assumed or
guaranteed), and that the subordination is for the benefit of the holders of
Senior Indebtedness of Holdings.
SECTION 10.02. CERTAIN DEFINITIONS.
"Designated Senior Indebtedness" means (i) any Indebtedness
outstanding under the Term Loan Facility or (ii) any other Senior Indebtedness
of Holdings the principal amount of which is $25.0 million or more and that has
been designated by Holdings as "Designated Senior Indebtedness."
"Permitted Junior Securities" means Equity Interests in Holdings or
debt securities that are subordinated to all Senior Indebtedness of Holdings
(and any debt securities issued in exchange for Senior Indebtedness of Holdings)
to substantially the same extent as, or to a greater extent than, the Holdings
Guarantee is subordinated to Senior Indebtedness of Holdings pursuant to this
Indenture.
"Representative" means the indenture trustee or other trustee, agent
or representative for any Senior Indebtedness.
"Senior Indebtedness" means Obligations with respect to the Term Loan
Facility and any other Indebtedness of Holdings now or hereafter incurred except
such Indebtedness specifically designated by Holdings as subordinated
Indebtedness at the time of its incurrence. Notwithstanding anything to the
contrary in the foregoing, Senior Indebtedness will not include (w) any
liability for federal, state, local or other taxes owed or owing by Holdings,
(x) any Indebtedness of Holdings to any of its Subsidiaries or other Affiliates,
(y) any trade payables or (z) any Indebtedness that is incurred in violation of
this Indenture.
A distribution may consist of cash, securities or other property, by
set-off or otherwise.
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of Holdings in a liquidation or
dissolution of Holdings or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to Holdings or its property, in an
assignment for the benefit of creditors or any marshaling of Holding's assets
and liabilities:
(1) holders of Senior Indebtedness of Holdings shall be entitled to
receive payment in full in cash of all Obligations due in respect of such Senior
Indebtedness of Holdings (including interest after the commencement of any such
proceeding at the rate specified in the instrument governing the applicable
Senior Indebtedness of Holdings, whether or not an allowable claim in such
proceeding) before Holders of the Notes shall be entitled to receive any payment
with respect to the Holdings Guarantee (except that Holders may receive (i)
Permitted Junior Securities and (ii) payments and other distributions made from
any defeasance trust created pursuant to Section 8.01 hereof); and
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(2) until all Obligations with respect to Senior Indebtedness of
Holdings (as provided in subsection (1) above) are paid in full in cash, any
distribution to which Holders would be entitled but for this Article 10 shall be
made to holders of Senior Indebtedness of Holdings (except that Holders of Notes
may receive (i) Permitted Junior Securities and (ii) payments and other
distributions made from any defeasance trust created pursuant to Section 8.01
hereof), as their interests may appear.
SECTION 10.04. DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS.
Holdings may not make any payment or distribution to the Trustee or
any Holder in respect of Obligations with respect to the Holdings Guarantee and
may not acquire from the Trustee or any Holder any Notes for cash or property
(other than (i) Permitted Junior Securities and (ii) payments and other
distributions made from any defeasance trust created pursuant to Section 8.01
hereof) until all principal and other Obligations with respect to the Senior
Indebtedness of Holdings have been paid in full if:
(i) a default in the payment of any principal or other Obligations with
respect to Designated Senior Indebtedness of Holdings occurs and is continuing
beyond any applicable grace period in the agreement, indenture or other
document governing such Designated Senior Indebtedness of Holdings; or
(ii) a default, other than a payment default, on Designated Senior
Indebtedness of Holdings occurs and is continuing that then permits holders of
such Designated Senior Indebtedness to accelerate its maturity and the Trustee
receives a notice of the default (a "PAYMENT BLOCKAGE NOTICE") from a Person
who may give it pursuant to Section 10.12 hereof. If the Trustee receives any
such Payment Blockage Notice, no subsequent Payment Blockage Notice shall be
effective for purposes of this Section unless and until (i) at least 360 days
shall have elapsed since the effectiveness of the immediately prior Payment
Blockage Notice and (ii) all scheduled payments of principal, premium, if any,
and interest on the Notes that have come due have been paid in full in cash.
No nonpayment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the Trustee shall be, or be made, the basis
for a subsequent Payment Blockage Notice unless such default shall have been
waived for a period of not less than 180 days.
Holdings may and shall resume payments on and distributions in respect
of the Holdings Guarantee and may acquire them upon the earlier of:
(1) the date upon which the default is cured or waived, or
(2) in the case of a default referred to in Section 10.04(ii) hereof,
179 days pass after notice is received if the maturity of such Designated Senior
Indebtedness has not been accelerated,
if this Article 10 otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
SECTION 10.05. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default,
Holdings shall promptly notify holders of Senior Indebtedness of Holdings of the
acceleration.
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SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of
any Obligations with respect to the Holdings Guarantee at a time when the
Trustee or such Holder, as applicable, has actual knowledge that such payment is
prohibited by Article 10 hereof, such payment shall be held by the Trustee or
such Holder, in trust for the benefit of, and shall be paid forthwith over and
delivered, upon written request, to, the holders of Senior Indebtedness of
Holdings as their interests may appear or their Representative under the
indenture or other agreement (if any) pursuant to which Senior Indebtedness of
Holdings may have been issued, as their respective interests may appear, for
application to the payment of all Obligations with respect to Senior
Indebtedness of Holdings remaining unpaid to the extent necessary to pay such
Obligations in full in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Indebtedness
of Holdings.
With respect to the holders of Senior Indebtedness of Holdings, the
Trustee undertakes to perform only such obligations on the part of the Trustee
as are specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness of Holdings shall
be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness of
Holdings, and shall not be liable to any such holders if the Trustee shall pay
over or distribute to or on behalf of Holders or Holdings or any other Person
money or assets to which any holders of Senior Indebtedness of Holdings shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
SECTION 10.07. NOTICE BY COMPANY.
Holdings shall promptly notify the Trustee and the Paying Agent of any
facts known to Holdings that would cause a payment of any Obligations with
respect to Holdings Guarantee to violate this Article 10, but failure to give
such notice shall not affect the subordination of the Holdings Guarantee to the
Senior Indebtedness of Holdings as provided in this Article 10.
SECTION 10.08. SUBROGATION.
After all Senior Indebtedness of Holdings is paid in full and until
the Notes are paid in full, Holders of Notes shall be subrogated (equally and
ratably with all other Indebtedness pari passu with the Notes) to the rights of
holders of Senior Indebtedness of Holdings to receive distributions applicable
to Senior Indebtedness of Holdings to the extent that distributions otherwise
payable to the Holders of Notes have been applied to the payment of Senior
Indebtedness of Holdings. A distribution made under this Article 10 to holders
of Senior Indebtedness of Holdings that otherwise would have been made to
Holders of Notes is not, as between Holdings and Holders, a payment by Holdings
on the Notes.
SECTION 10.09. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Indebtedness of Holdings. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay principal
of and interest on the Notes in accordance with their terms;
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(2) affect the relative rights of Holders of Notes and creditors of
the Company other than their rights in relation to holders of Senior
Indebtedness; or
(3) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Senior Indebtedness to receive distributions and payments
otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Indebtedness of Holdings to enforce
the subordination of the Indebtedness evidenced by the Holdings Guarantee shall
be impaired by any act or failure to act by Holdings or any Holder or by the
failure of Holdings or any Holder to comply with this Indenture.
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness of Holdings, the distribution may be made and the notice
given to their Representative.
Upon any payment or distribution of assets of Holdings referred to in
this Article 10, the Trustee and the Holders of Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders of Notes
for the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Indebtedness of Holdings and other
Indebtedness of Holdings, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article 10.
SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Holdings Guarantee to violate this Article 10. Only
Holdings or a Representative may give the notice. Nothing in this Article 10
shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness of Holdings with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights.
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or
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proof of debt in the form required in any proceeding referred to in Section 6.09
hereof at least 30 days before the expiration of the time to file such claim,
the credit agents are hereby authorized to file an appropriate claim for and on
behalf of the Holders of the Notes.
SECTION 10.14. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the holders of all Senior Indebtedness of
Holdings.
ARTICLE 11.
SUBSIDIARY GUARANTEES
SECTION 11.01. SUBSIDIARY GUARANTEE.
Subject to this Article 11, each of the Subsidiary Guarantors hereby,
jointly and severally (with Holdings with respect to the Holdings Guarantee),
unconditionally guarantees to each Holder of a Note authenticated and delivered
by the Trustee and to the Trustee and its successors and assigns, irrespective
of the validity and enforceability of this Indenture, the Notes or the
obligations of the Company hereunder or thereunder, that: (a) the principal of
and interest on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall be jointly and severally
obligated to pay the same immediately. Each Subsidiary Guarantor agrees that
this is a guarantee of payment and not a guarantee of collection.
The Subsidiary Guarantors hereby agree that their obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Subsidiary Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenant that this Subsidiary
Guarantee shall not be discharged except by complete performance of the
obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Subsidiary Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
the Subsidiary Guarantors, any amount paid by either to the Trustee or such
Holder, this Note Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.
Each Subsidiary Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Subsidiary Guarantor further agrees that, as between the Subsidiary
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Guarantors, on the one hand, and the Holders and the Trustee, on the other hand,
(x) the maturity of the obligations guaranteed hereby may be accelerated as
provided in Article 6 hereof for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such obligations as provided in
Article 6 hereof, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Subsidiary Guarantors for the purpose of
this Subsidiary Guarantee. The Guarantors shall have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Holders under the Subsidiary Guarantees.
SECTION 11.02. LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY.
Each Subsidiary Guarantor, and by its acceptance of Notes, each
Holder, hereby confirms that it is the intention of all such parties that the
Subsidiary Guarantee of such Guarantor not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to
the extent applicable to any Subsidiary Guarantee. To effectuate the foregoing
intention, the Trustee, the Holders and the Subsidiary Guarantors hereby
irrevocably agree that the obligations of such Subsidiary Guarantor under its
Subsidiary Guarantee and this Article 11 shall be limited to the maximum amount
as will, after giving effect to such maximum amount and all other contingent and
fixed liabilities of such Subsidiary Guarantor that are relevant under such
laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under this Article 11 or
Article 12 hereto, result in the obligations of such Guarantor under its Note
Guarantee not constituting a fraudulent transfer or conveyance.
SECTION 11.03. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section 11.01, each
Subsidiary Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit E shall be endorsed by an Officer
of such Subsidiary Guarantor on each Note authenticated and delivered by the
Trustee and that this Indenture shall be executed on behalf of such Guarantor by
its President or one of its Vice Presidents.
Each Subsidiary Guarantor hereby agrees that its Subsidiary Guarantee
set forth in Section 11.01 shall remain in full force and effect notwithstanding
any failure to endorse on each Note a notation of such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set
forth in this Indenture on behalf of the Subsidiary Guarantors.
In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.19 hereof,
the Company shall cause such Subsidiaries to execute supplemental indentures to
this Indenture and Note Guarantees in accordance with Section 4.19 hereof and
this Article 11, to the extent applicable.
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SECTION 11.04. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
No Subsidiary Guarantor may consolidate with or merge with or into
(whether or not such Subsidiary Guarantor is the surviving Person) another
Person whether or not affiliated with such Subsidiary Guarantor unless:
(a) subject to Section 11.05 hereof, the Person formed by or surviving
any such consolidation or merger (if other than a Subsidiary Guarantor or the
Company) unconditionally assumes all the obligations of such Subsidiary
Guarantor, pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee, under the Unit Agreement, the Notes, this
Indenture, the Pledge Agreement, the Debt Registration Rights Agreement and the
Subsidiary Guarantee on the terms set forth herein or therein;
(b) immediately after giving effect to such transaction, no Default or
Event of Default exists; and
(c) except in the case of any such merger or consolidation with the
Company or another Subsidiary Guarantor, the Company would be permitted by
virtue of the Company's Debt to Cash Flow Ratio, immediately after giving effect
to such transaction, to incur at least $1.00 of additional Indebtedness pursuant
to the Debt to Cash Flow Ratio test set forth in the first paragraph of Section
4.09 hereof.
In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the
Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Subsidiary Guarantor, such successor Person shall succeed to
and be substituted for the Subsidiary Guarantor with the same effect as if it
had been named herein as a Subsidiary Guarantor. Such successor Person
thereupon may cause to be signed any or all of the Subsidiary Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All the
Subsidiary Guarantees so issued shall in all respects have the same legal rank
and benefit under this Indenture as the Subsidiary Guarantees theretofore and
thereafter issued in accordance with the terms of this Indenture as though all
of such Subsidiary Guarantees had been issued at the date of the execution
hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Subsidiary Guarantor with
or into the Company or another Subsidiary Guarantor, or shall prevent any sale
or conveyance of the property of a Subsidiary Guarantor as an entirety or
substantially as an entirety to the Company or another Subsidiary Guarantor.
SECTION 11.05. RELEASES FOLLOWING SALE OF ASSETS.
In the event of a sale or other disposition of all of the assets of
any Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a
sale or other disposition of all of the capital stock of any Subsidiary
Guarantor, then such Subsidiary Guarantor (in the event of a sale or other
disposition, by way of merger, consolidation or otherwise, of all of the capital
stock of such Subsidiary Guarantor) or the corporation acquiring the property
(in the event of a sale or other disposition of all or substantially all of the
assets of such Subsidiary Guarantor) will be released and relieved of any
obligations under its
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Subsidiary Guarantee; provided that the Net Proceeds of such sale or other
disposition are applied in accordance with the applicable provisions of this
Indenture, including without limitation Section 4.10 hereof. Upon delivery by
the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel
to the effect that such sale or other disposition was made by the Company in
accordance with the applicable provisions of this Indenture, including without
limitation Section 4.10 hereof, the Trustee shall execute any documents
reasonably required in order to evidence the release of any Subsidiary Guarantor
from its obligations under its Subsidiary Guarantee.
Any Subsidiary Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of any Subsidiary Guarantor
under this Indenture as provided in this Article 11.
ARTICLE 12.
HOLDINGS GUARANTEE
SECTION 12.01. HOLDINGS GUARANTEE.
Subject to this Article 12, Holdings hereby, jointly and severally
(with the Subsidiary Guarantors, with respect to their Subsidiary Guarantees),
unconditionally guarantees to each Holder of a Note authenticated and delivered
by the Trustee and to the Trustee and its successors and assigns, irrespective
of the validity and enforceability of this Indenture, the Notes or the
obligations of the Company hereunder or thereunder, that: (a) the principal of
and interest on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall be jointly and severally
obligated to pay the same immediately. Holdings agrees that this is a guarantee
of payment and not a guarantee of collection.
Holdings hereby agrees that its obligation hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Holdings hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Holdings Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes and this
Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, Holdings or any custodian, trustee, liquidator or other
similar official acting in relation to either the Company or Holdings, any
amount paid by either to the Trustee or such Holder, this Holdings Guarantee, to
the extent theretofore discharged, shall be reinstated in full force and effect.
Holdings agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations
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guaranteed hereby until payment in full of all obligations guaranteed hereby.
Holdings further agrees that, as between Holdings, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article 6 hereof for the
purposes of this Note Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by Holdings for the
purpose of this Holdings Guarantee. Holdings shall have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Holders under the Holdings Guarantee.
SECTION 12.02. LIMITATION ON HOLDINGS LIABILITY.
Holdings, and by its acceptance of Notes, each Holder, hereby confirms
that it is the intention of all such parties that the Holdings Guarantee of such
Holdings not constitute a fraudulent transfer or conveyance for purposes of
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to the
Holdings Guarantee. To effectuate the foregoing intention, the Trustee, the
Holders and Holdings hereby irrevocably agree that the obligations of Holdings
under its Holdings Guarantee and this Article 12 shall be limited to the maximum
amount as will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of Holdings that are relevant under such laws,
and after giving effect to any collections from, rights to receive contribution
from or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under Article 11 hereof, result in the
obligations of such Guarantor under its Note Guarantee not constituting a
fraudulent transfer or conveyance.
SECTION 12.03. EXECUTION AND DELIVERY OF HOLDINGS GUARANTEE.
To evidence its Holdings Guarantee set forth in Section 12.01,
Holdings hereby agrees that a notation of such Holdings Guarantee substantially
in the form included in Exhibit E shall be endorsed by an Officer of Holdings on
each Note authenticated and delivered by the Trustee and that this Indenture
shall be executed on behalf of Holdings by its President or one of its Vice
Presidents.
Holdings hereby agrees that its Holdings Guarantee set forth in
Section 12.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Holdings Guarantee.
If an Officer whose signature is on this Indenture or on the Holdings
Guarantee no longer holds that office at the time the Trustee authenticates the
Holdings on which a Holdings Guarantee is endorsed, the Holdings Guarantee shall
be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Holdings Guarantee set
forth in this Indenture on behalf of Holdings.
SECTION 12.04. HOLDINGS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
Holdings may not consolidate with or merge with or into (whether or
not such Guarantor is the surviving Person) another Person whether or not
affiliated with such Guarantor unless:
(a) the Person formed by or surviving any such consolidation or merger
(if other than a Guarantor or the Company) unconditionally assumes all the
obligations of such Guarantor,
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pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee, under the Notes, the Unit Agreement, this
Indenture, the Pledge Agreement, the Debt Registration Rights Agreement, the
Warrant Registration Rights Agreement, and the Holdings Guarantee on the terms
set forth herein or therein; and
(b) immediately after giving effect to such transaction, no Default or
Event of Default exists.
In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the
Holdings Guarantee endorsed upon the Notes and the due and punctual performance
of all of the covenants and conditions of this Indenture to be performed by
Holdings, such successor Person shall succeed to and be substituted for Holdings
with the same effect as if it had been named herein as a Guarantor. Such
successor Person thereupon may cause to be signed Holdings Guarantee to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All the Holdings
Guarantee so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Holdings Guarantee theretofore and thereafter issued
in accordance with the terms of this Indenture as though all of such Holdings
Guarantee had been issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of Holdings with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
SECTION 12.05. SUBORDINATION.
The Holdings Guarantee is subordinated as set forth in Article 10.
ARTICLE 13.
MISCELLANEOUS
SECTION 13.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA (S) 318(c), the imposed duties shall control.
SECTION 13.02. NOTICES.
Any notice or communication by the Company, any Guarantor or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address
If to the Company and/or any Guarantor:
AMSC Acquisition Company, Inc.
10802 Parkridge Blvd.
Reston, VA 20191-5416
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Telecopier No.: 703-758-6134
Attention: Randy S. Segal, Esq.
With a copy to:
Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004-1202
Telecopier No.: 202-942-5999
Attention: Richard E. Baltz, Esq.
If to the Trustee:
State Street Bank and Trust Company
Goodwin Square
225 Asylum Street
Hartford, Connecticut 06103
Telecopier No.: (860) 244-1897
Attention: Steven Cimalore
The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA (S) 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 13.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA (S) 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
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Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 13.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 13.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA
(S) 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 13.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 13.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company or any Guarantor, as such, shall have any
liability for any obligations of the Company or such Guarantor under the Notes,
the Note Guarantees, this Indenture or for any claim based on, in respect of, or
by reason of, such obligations or their creation. Each Holder by accepting a
Note waives and releases all such liability. The waiver and release are part of
the consideration for issuance of the Notes.
SECTION 13.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
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EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 13.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 13.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 13.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 13.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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SIGNATURES
Dated as of March 31, 1998
AMSC ACQUISITION COMPANY, INC.
By:
---------------------------------
Name:
Title:
AMERICAN MOBILE SATELLITE CORPORATION
By:
---------------------------------
Name:
Title:
AMERICAN MOBILE SATELLITE SALES CORPORATION
By:
---------------------------------
Name:
Title:
AMSC SALES CORPORATION LTD.
By:
---------------------------------
Name:
Title:
AMSC SUBSIDIARY CORPORATION
By:
---------------------------------
Name:
Title:
Indenture signature page(s)
<PAGE>
ARDIS COMPANY
By:
---------------------------------
Name:
Title:
MOTOROLA ARDIS, INC.
By:
---------------------------------
Name:
Title:
MOTOROLA ARDIS ACQUISITION, INC.
By:
---------------------------------
Name:
Title:
ARDIS HOLDING COMPANY
By:
---------------------------------
Name:
Title:
RADIO DATA NETWORK HOLDING CORPORATION
By:
---------------------------------
Name:
Title:
Indenture signature page(s)
<PAGE>
STATE STREET BANK AND TRUST COMPANY
By:
---------------------------------
Name:
Title:
Indenture signature page(s)
<PAGE>
EXHIBIT A1
(Face of Note)
[INSERT THE GLOBAL NOTE LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF THE
INDENTURE]
[INSERT THE PRIVATE PLACEMENT LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS
OF THE INDENTURE]
CUSIP/CINS 00178DAA5
12 1/4% [Series A] [Series B] Senior Notes due 2008
No. $
AMSC ACQUISITION COMPANY, INC.
promises to pay to ______________ or registered assigns, the principal sum of
_______________ Dollars on April 1, 2008.
Interest Payment Dates: April 1 and October 1.
Record Dates: March 15 and September 15.
A1-1
<PAGE>
Dated: _____ __, ____.
AMSC Acquisition Company, Inc.
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
State Street Bank and Trust Company,
as Trustee
By:
--------------------------------
A1-2
<PAGE>
(Back of Note)
12 1/4% [Series A] [Series B] Senior Notes due 2008
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. AMSC Acquisition Company, Inc., a Delaware corporation
(the "COMPANY"), promises to pay interest on the principal amount of this Note
at 12 1/4% per annum from March 31, 1998 until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Debt Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually on April 1 and October 1 of each year, or if any such day
is not a Business Day, on the next succeeding Business Day (each an "INTEREST
PAYMENT DATE"). Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be October 1, 1998. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the March 15 or
September 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Liquidated
Damages, if any, and interest at the office or agency of the Company maintained
for such purpose within or without the City and State of New York, or, at the
option of the Company, payment of interest and Liquidated Damages may be made by
check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium and
Liquidated Damages on, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer instructions to the Company or the Paying
Agent. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and Trust
Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated
as of March 31, 1998 ("INDENTURE") among the Company, the Guarantors and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such
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<PAGE>
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $335 million in
aggregate principal amount.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Notes shall not be subject to redemption at the Company's option prior to
April 1, 2003. The Notes shall be subject to redemption at any time at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the applicable redemption date, if redeemed during the
twelve-month period beginning on April 1 of the years indicated below:
YEAR PERCENTAGE
---- ----------
2003................................................ 106.125%
2004................................................ 104.083%
2005................................................ 102.042%
2006 and thereafter................................. 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, during the first 36 months after the date of the Indenture, the
Company may redeem up to 35% of the aggregate principal amount of Notes
originally issued hereunder at a redemption price of 112.25% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the redemption date, with the net cash proceeds to the Company of an
Equity Offering; provided that (i) at least $217.8 million in aggregate
principal amount of the Notes remain outstanding immediately after the
occurrence of each such redemption (excluding Notes held by the Company and its
Subsidiaries) and (ii) each such redemption shall occur within 45 days after the
date of the closing of any such Equity Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required to
make an offer (a "CHANGE OF CONTROL OFFER") to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of purchase
(the "CHANGE OF CONTROL PAYMENT"). Within 10 days following any Change of
Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales, within
five days of each date on which the aggregate amount of Excess Proceeds exceeds
$10.0 million, the Company shall commence an offer to all Holders of Notes (as
"ASSET SALE OFFER") pursuant to Section 3.09 of the Indenture to purchase the
maximum principal amount of Notes that may be purchased out of the Excess
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<PAGE>
Proceeds at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the date fixed for the closing of such offer, in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company (or such Subsidiary) may use such deficiency for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a pro rata basis. Holders of Notes that are the
subject of an offer to purchase will receive an Asset Sale Offer from the
Company prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes
or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, the Note Guarantees or the Notes may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes voting as a single class, and any existing default or
compliance with any provision of the Indenture, the Note Guarantees or the Notes
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Notes voting as a single class. Without the consent of
any Holder of a Note, the Indenture, the Note Guarantees or the Notes may be
amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's or Guarantor's obligations
to Holders of the Notes in case of a merger or consolidation, to make any change
that would provide any additional rights or benefits to the Holders of the Notes
or that does not adversely affect the legal rights under the Indenture of any
such Holder, to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act, or to
allow any Guarantor to execute a supplemental indenture to the Indenture and/or
a Note Guarantee with respect to the Notes.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default in
the payment when due of interest on, or Liquidated Damages with respect to, the
Notes and such default continues for a period of 30 days (whether or not
prohibited, with respect to the Holdings Guarantee, by the subordination
A1-5
<PAGE>
provisions of Article 10 of the Indenture); (ii) default in the payment when due
of principal of or premium, if any, on the Notes when the same becomes due and
payable at maturity, upon redemption (including in connection with an offer to
purchase) or otherwise (whether or not prohibited, with respect to the Holdings
Guarantee, by the subordination provisions of Article 10 of the Indenture),
(iii) failure by the Company to comply with any of the provisions of Section
4.07, 4.09, 4.10 or 4.15 of the Indenture; (iv) failure by the Company for 60
days after notice to the Company by the Trustee or the Holders of at least 25%
in principal amount of the Notes then outstanding voting as a single class to
comply with certain other agreements in the Indenture or the Notes; (v) default
under certain other agreements relating to Indebtedness of the Company or any of
its Subsidiaries which default results in the acceleration of such Indebtedness
prior to its express maturity; (vi) default under certain other agreements
relating to Indebtedness of Holdings which default results in the acceleration
of such Indebtedness prior to its express maturity; (viii) certain final
judgments against the Company or its Subsidiaries for the payment of money that
remain undischarged for a period of 60 days; (ix) certain final judgments
against Holdings for the payment of money that remain undischarged for a period
of 60 days; (x) material breach by Holdings, the Company or any Subsidiary of
any representation or warranty set forth in the Unit Agreement or the Pledge
Agreement, or material default by Holdings, the Company or any Subsidiary in the
performance of any covenant set forth in the Unit Agreement or the Pledge
Agreement, or repudiation by Holdings, the Company or any Subsidiary of its
obligations under the Unit Agreement or the Pledge Agreement or the
unenforceability of the Unit Agreement or the Pledge Agreement against Holdings,
the Company or any Subsidiary for any reason; (xi) the termination or revocation
of any of the permits, licenses, approvals, orders, certificates, franchises or
authorizations of governmental or regulatory authorities, including those
relating to the Federal Communications Act of 1934, as amended, owned or held by
Holdings, the Company or any of the Subsidiary Guarantors that are material to
the Company and its Subsidiaries, taken as a whole, (collectively, "LICENSES")
or any other material impairment occurs of the rights under any such Licenses of
the holder of such License; (xii) certain events of bankruptcy or insolvency
with respect to the Company or any Guarantor; and (xiii) except as permitted by
the Indenture, any Note Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor or any Person acting on its behalf shall deny or
disaffirm its obligations under such Guarantor's Note Guarantee. If any Event
of Default occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of the then outstanding Notes may declare all the Notes to
be due and payable. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding
Notes will become due and payable without further action or notice. Holders may
not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
A1-6
<PAGE>
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Debt Registration
Rights Agreement dated as of March 31, 1998, between the Company and the parties
named on the signature pages thereof (the "DEBT REGISTRATION RIGHTS AGREEMENT").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Debt Registration Rights
Agreement. Requests may be made to:
AMSC Acquisition Company, Inc.
10802 Parkridge Blvd.
Reston, Virginia 20191-5416
Attention: Randy S. Segal, Esq.
A1-7
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:_________________
Your Signature:
-------------------------------------
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:______________________________
SIGNATURE GUARANTEE:
---------------------------------
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include membership
or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the
Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A1-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[_] Section 4.10 [_] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date:__________________
Your Signature:
-------------------------------------
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:______________________________
SIGNATURE GUARANTEE:
---------------------------------
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include membership
or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the
Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A1-9
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of decrease Amount of increase of this Global Signature of
in Principal in Principal Note following authorized
Amount of this Amount of this such decrease (or officer of
Date of Exchange Global Note Global Note increase) Trustee or Note
Custodian
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
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- ---------------------------------------------------------------------------------------------------
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</TABLE>
A1-10
<PAGE>
EXHIBIT A2
(Face of Regulation S Temporary Global Note)
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE
AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER
ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT. THE
HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN OF RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL, AND EACH
A2-1
<PAGE>
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED
HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE.
CUSIP/CINS U00178AA8
12 1/4% Series A Senior Notes due 2008
No._____ $_______________
AMSC ACQUISITION COMPANY, INC.
promises to pay to ______________ or registered assigns, the principal sum of
_______________ Dollars on April 1, 2008.
Interest Payment Dates: April 1 and October 1.
Record Dates: March 15 and September 15.
A2-2
<PAGE>
Dated: _____ __, ____.
AMSC Acquisition Company, Inc.
By:
-----------------------------------------
Name:
Title:
By:
-----------------------------------------
Name:
Title:
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
State Street Bank and Trust Company,
as Trustee
By:
-----------------------------------------
A2-3
<PAGE>
(Back of Regulation S Temporary Global Note)
12 1/4% Series A Senior Notes due 2008
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. AMSC Acquisition Company, Inc., a Delaware corporation
(the "COMPANY"), promises to pay interest on the principal amount of this Note
at 12 1/4% per annum from March 31, 1998 until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Debt Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually on April 1 and October 1 of each year, or if any such day
is not a Business Day, on the next succeeding Business Day (each an "INTEREST
PAYMENT DATE"). Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be October 1, 1998. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for one or
more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Senior Subordinated Notes under the Indenture.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the March 15 or
September 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium, interest and
Liquidated Damages at the office or agency of the Company maintained for such
purpose within or without the City and State of New York, or, at the option of
the Company, payment of interest and Liquidated Damages may be made by check
mailed to the Holders at their addresses set forth in the register of Holders,
and provided that payment by wire transfer of immediately available funds will
be required with respect to principal of and interest, premium and Liquidated
Damages on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank & Trust
Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
A2-4
<PAGE>
4. INDENTURE. The Company issued the Notes under an Indenture dated
as of March 31, 1998 ("INDENTURE") among the Company, the Guarantors and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. The Notes are general obligations of the Company limited to $335
million in aggregate principal amount.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Notes shall not be subject to redemption at the Company's option prior to April
1, 2003. The Notes shall be subject to redemption at any time at the option of
the Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the applicable redemption date, if redeemed during the twelve-month
period beginning on April 1 of the years indicated below:
YEAR PERCENTAGE
---- ----------
2003................................................ 106.125%
2004................................................ 104.083%
2005................................................ 102.042%
2006 and thereafter................................. 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, during the first 36 months after the date of the Indenture, the
Company may redeem up to 35% of the aggregate principal amount of Notes
originally issued hereunder at a redemption price of 112.25% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the redemption date, with the net cash proceeds to the Company of an
Equity Offering; provided that (i) at least $217.8 million in aggregate
principal amount of the Notes remain outstanding immediately after the
occurrence of each such redemption (excluding Notes held by the Company and its
Subsidiaries) and (ii) each such redemption shall occur within 45 days after the
date of the closing of any such Equity Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required to
make an offer (a "CHANGE OF CONTROL OFFER") to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase (the "CHANGE OF CONTROL
PAYMENT"). Within 10 days following any Change of Control, the Company shall
mail a notice to each Holder setting forth the procedures governing the Change
of Control Offer as required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales, within
five days of each date on which the aggregate amount of Excess Proceeds exceeds
$10.0 million, the Company shall commence an offer to all Holders of Notes (as
"ASSET SALE OFFER") pursuant to Section 3.09 of the
A2-5
<PAGE>
Indenture to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest,
if any, to the date fixed for the closing of such offer, in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company (or such Subsidiary) may use such deficiency for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a pro rata basis. Holders of Notes that are the
subject of an offer to purchase will receive an Asset Sale Offer from the
Company prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes
or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
This Regulation S Temporary Global Note is exchangeable in whole or in
part for one or more Global Notes only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S) and (ii) upon presentation
of certificates (accompanied by an Opinion of Counsel, if applicable) required
by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary
Global Note for one or more Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, the Note Guarantees or the Notes may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes voting as a single class, and any existing default or
compliance with any provision of the Indenture, the Note Guarantees or the Notes
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Notes voting as a single class. Without the consent of
any Holder of a Note, the Indenture, the Note Guarantees or the Notes may be
amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's or Guarantor's obligations
to Holders of the Notes in case of a merger or consolidation, to make any change
that would provide any additional rights or benefits to the Holders of the Notes
or that does not adversely affect the legal rights under the Indenture of any
such
A2-6
<PAGE>
Holder, to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act, or to
allow any Guarantor to execute a supplemental indenture to the Indenture and/or
a Note Guarantee with respect to the Notes.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default in
the payment when due of interest on, or Liquidated Damages with respect to, the
Notes and such default continues for a period of 30 days (whether or not
prohibited, with respect to the Holdings Guarantee, by the subordination
provisions of Article 10 of the Indenture); (ii) default in the payment when due
of principal of or premium, if any, on the Notes when the same becomes due and
payable at maturity, upon redemption (including in connection with an offer to
purchase) or otherwise (whether or not prohibited, with respect to the Holdings
Guarantee, by the subordination provisions of Article 10 of the Indenture),
(iii) failure by the Company to comply with any of the provisions of Section
4.07, 4.09, 4.10 or 4.15 of the Indenture; (iv) failure by the Company for 60
days after notice to the Company by the Trustee or the Holders of at least 25%
in principal amount of the Notes then outstanding voting as a single class to
comply with certain other agreements in the Indenture or the Notes; (v) default
under certain other agreements relating to Indebtedness of the Company or any of
its Subsidiaries which default results in the acceleration of such Indebtedness
prior to its express maturity; (vi) default under certain other agreements
relating to Indebtedness of Holdings which default results in the acceleration
of such Indebtedness prior to its express maturity; (viii) certain final
judgments against the Company or its Subsidiaries for the payment of money that
remain undischarged for a period of 60 days; (ix) certain final judgments
against Holdings for the payment of money that remain undischarged for a period
of 60 days; (x) material breach by Holdings, the Company or any Subsidiary of
any representation or warranty set forth in the Unit Agreement or the Pledge
Agreement, or material default by Holdings, the Company or any Subsidiary in the
performance of any covenant set forth in the Unit Agreement or the Pledge
Agreement, or repudiation by Holdings, the Company or any Subsidiary of its
obligations under the Unit Agreement or the Pledge Agreement or the
unenforceability of the Unit Agreement or the Pledge Agreement against Holdings,
the Company or any Subsidiary for any reason; (xi) the termination or revocation
of any of the permits, licenses, approvals, orders, certificates, franchises or
authorizations of governmental or regulatory authorities, including those
relating to the Federal Communications Act of 1934, as amended, owned or held by
Holdings, the Company or any of the Subsidiary Guarantors which are material to
the Company and its Subsidiaries, taken as a whole, (collectively, "LICENSES")
or any other material impairment occurs of the rights under any such Licenses of
the holder of any License; (xii) certain events of bankruptcy or insolvency with
respect to the Company or any Guarantor; and (xiii) except as permitted by the
Indenture, any Note Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor or any Person acting on its behalf shall deny or
disaffirm its obligations under such Guarantor's Note Guarantee. If any Event
of Default occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of the then outstanding Notes may declare all the Notes to
be due and payable. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding
Notes will become due and payable without further action or notice. Holders may
not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a
A2-7
<PAGE>
statement regarding compliance with the Indenture, and the Company is required
upon becoming aware of any Default or Event of Default, to deliver to the
Trustee a statement specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company or any of the Guarantors, as such,
shall not have any liability for any obligations of the Company or such
Guarantor under the Notes, the Note Guarantees or the Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Debt Registration
Rights Agreement dated as of March 31, 1998, between the Company and the parties
named on the signature pages thereof (the "DEBT REGISTRATION RIGHTS AGREEMENT").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Debt Registration Rights
Agreement. Requests may be made to:
AMSC Acquisition Company, Inc.
10802 Parkridge Blvd.
Reston, Virginia 20191-5416
Attention: Randy S. Segal, Esq.
A2-8
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:_____________
Your Signature:
-------------------------------------
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:______________________________
SIGNATURE GUARANTEE:
_________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include membership
or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the
Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A2-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:
[_] Section 4.10 [_] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $___________
Date:________________
Your Signature:
-------------------------------------
(Sign exactly as your name appears on the face of
this Note)
Tax Identification No:______________________________
SIGNATURE GUARANTEE:
---------------------------------
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include membership
or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the
Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A2-10
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary
Global Note for an interest in another Global Note, or of other Restricted
Global Notes for an interest in this Regulation S Temporary Global Note, have
been made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Amount of decrease Amount of increase of this Global authorized
in Principal in Principal Note following officer of
Amount of this Amount of this such decrease (or Trustee or Note
Date of Exchange Global Note Global Note increase) Custodian
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
</TABLE>
A2-11
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
AMSC Acquisition Company, Inc.
10802 Parkridge Blvd.
Reston, Virginia 20191-5416
Telecopier No.: 703-758-6134
Attention: Randy S. Segal, Esq.
State Street Bank and Trust Company
Goodwin Square
225 Asylum Street
Hartford, Connecticut 06103
Attention: Steven Cimalore
Re: 12 1/4% Senior Notes due 2008
-----------------------------
(CUSIP __________)
Reference is hereby made to the Indenture, dated as of March 31, 1998
(the "INDENTURE"), among AMSC Acquisition Company, Inc., as issuer (the
"COMPANY"), American Mobile Satellite Corporation, American Mobile Satellite
Sales Corporation, AMSC Sales Corporation Ltd., AMSC Subsidiary Corporation,
ARDIS Company, Motorola ARDIS, Inc., Motorola ARDIS Acquisition, Inc., ARDIS
Holding Company, and Radio Data Network Holding Corporation (collectively, the
"GUARANTORS") and State Street Bank and Trust Company, as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
______________, (the "TRANSFEROR") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "TRANSFER"),
to __________ (the "TRANSFEREE"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
----------------------------------------------------------------------
144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is
- -----------------------------------------------------------
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "SECURITIES ACT"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
B-1
<PAGE>
2. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
----------------------------------------------------------------------
TEMPORARY REGULATION S GLOBAL NOTE, THE REGULATION S GLOBAL NOTE OR A DEFINITIVE
- --------------------------------------------------------------------------------
NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and
- -----------------------------
in accordance with Rule 903 or Rule 904 under the Securities Act and,
accordingly, the Transferor hereby further certifies that (i) the Transfer is
not being made to a person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting on its behalf reasonably believed and believes
that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows
that the transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the requirements of
Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act and, (iii)
the transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person or for the account or benefit of a U.S. Person (other than
an Initial Purchaser). Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend printed on the Regulation S Global Note, the
Temporary Regulation S Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.
3. [_] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
-------------------------------------------------------------------
INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION
- ------------------------------------------------------------------------------
OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is
- ----------------------------------------------------------
being effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Notes and Restricted Definitive Notes
and pursuant to and in accordance with the Securities Act and any applicable
blue sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [_] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) [_] such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) [_] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [_] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that it has not engaged in any general solicitation
within the meaning of Regulation D under the Securities Act and the Transfer
complies with the transfer restrictions applicable to beneficial interests in a
Restricted Global Note or Restricted Definitive Notes and the requirements of
the exemption claimed, which certification is supported by (1) a certificate
executed by the Transferee in the form of Exhibit D to the Indenture and (2) if
such Transfer is
B-2
<PAGE>
in respect of a principal amount of Notes at the time of transfer of less than
$250,000, an Opinion of Counsel provided by the Transferor or the Transferee (a
copy of which the Transferor has attached to this certification), to the effect
that such Transfer is in compliance with the Securities Act. Upon consummation
of the proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the IAI Global Note and/or the Definitive Notes and in the Indenture and the
Securities Act.
4. [_] Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) [_] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
(b) [_] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) [_] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
B-3
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
---------------------------------
[Insert Name of Transferor]
By:
------------------------------
Name:
Title:
Dated: ________ __, ____
B-4
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Note (CUSIP _________), or
(ii) [_] Regulation S Global Note (CUSIP _________), or
(iii) [_] IAI Global Note (CUSIP ________); or
(b) [_] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Note (CUSIP ________), or
(ii) [_] Regulation S Global Note (CUSIP ________), or
(iii) [_] IAI Global Note (CUSIP ________); or
(iv) [_] Unrestricted Global Note (CUSIP ________); or
(b) [_] a Restricted Definitive Note; or
(c) [_] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-5
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
AMSC Acquisition Company, Inc.
10802 Parkridge Blvd.
Reston, Virginia 20191-5416
Telecopier No.: 703-758-6134
Attention: Randy S. Segal, Esq.
State Street Bank and Trust Company
Goodwin Square
225 Asylum Street
Hartford, Connecticut 06103
Attention: Steven Cimalore
Re: 12 1/4% Senior Notes due 2008
-----------------------------
(CUSIP __________)
Reference is hereby made to the Indenture, dated as of March 31, 1998
(the "INDENTURE"), among AMSC Acquisition Company, Inc., as issuer (the
"COMPANY"), American Mobile Satellite Corporation, American Mobile Satellite
Sales Corporation, AMSC Sales Corporation Ltd., AMSC Subsidiary Corporation,
ARDIS Company, Motorola ARDIS, Inc., Motorola ARDIS Acquisition, Inc., ARDIS
Holding Company, and Radio Data Network Holding Corporation (collectively, the
"GUARANTORS") and State Street Bank and Trust Company, as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
____________, (the "OWNER") owns and proposes to exchange the Note[s]
or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "EXCHANGE"). In connection with
the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE
(a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
-------------------------------------------------------------
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In
- -----------------------------------------------------------------
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933, as amended (the "SECURITIES ACT"), (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(b) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
-------------------------------------------------------------
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
- -------------------------------------------
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i)
C-1
<PAGE>
the Definitive Note is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Global Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Definitive Note is
being acquired in compliance with any applicable blue sky securities laws of any
state of the United States.
(c) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
-------------------------------------------------------
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
- --------------------------------------------------
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
-------------------------------------------------------
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
- ----------------------------
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES
(a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
-------------------------------------------------------------
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
- -----------------------------------------
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
-------------------------------------------------------
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange
- -----------------------------------------------
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] 144A Global Note, Regulation S Global Note, IAI Global Note with an
equal principal amount, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the
C-2
<PAGE>
restrictions on transfer enumerated in the Private Placement Legend printed on
the relevant Restricted Global Note and in the Indenture and the Securities Act.
C-3
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
__________________________________
[Insert Name of Owner]
By:
-------------------------------
Name:
Title:
Dated: ________________, ____
C-4
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
AMSC Acquisition Company, Inc.
10802 Parkridge Blvd.
Reston, Virginia 20191-5416
Telecopier No.: 703-758-6134
Attention: Randy S. Segal, Esq.
State Street Bank and Trust Company
Goodwin Square
225 Asylum Street
Hartford, Connecticut 06103
Attention: Steven Cimalore
Re: 12 1/4 % Senior Notes due 2008
------------------------------
(CUSIP __________)
Reference is hereby made to the Indenture, dated as of March 31, 1998
(the "INDENTURE"), among AMSC Acquisition Company, Inc., as issuer (the
"COMPANY"), American Mobile Satellite Corporation, American Mobile Satellite
Sales Corporation, AMSC Sales Corporation Ltd., AMSC Subsidiary Corporation,
ARDIS Company, Motorola ARDIS, Inc., Motorola ARDIS Acquisition, Inc., ARDIS
Holding Company, and Radio Data Network Holding Corporation (collectively, the
"GUARANTORS") and State Street Bank and Trust Company, as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) [_] a beneficial interest in a Global Note, or
(b) [_] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "SECURITIES ACT").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
D-11
<PAGE>
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (c) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and, if such transfer is in respect of
a principal amount of Notes, at the time of transfer of less than $250,000, an
Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or
(F) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by
us will bear a legend to the foregoing effect. We further understand that any
subsequent transfer by us of the Notes or beneficial interest therein acquired
by us must be effected through one of the Initial Purchasers.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
__________________________________________
[Insert Name of Accredited Investor]
By:
---------------------------------
Name:
Title:
Dated: __________________, ____
D-12
<PAGE>
EXHIBIT E
FORM OF NOTATION OF GUARANTEE
For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of March 31, 1998 (the "INDENTURE") among
AMSC Acquisition Company, Inc., the Guarantors listed on Schedule I thereto and
State Street Bank and Trust Company, as trustee (the "TRUSTEE"), (a) the due and
punctual payment of the principal of, premium, if any, and interest on the Notes
(as defined in the Indenture), whether at maturity, by acceleration, redemption
or otherwise, the due and punctual payment of interest on overdue principal and
premium, and, to the extent permitted by law, interest, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms of the Indenture and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Guarantors to
the Holders of Notes and to the Trustee pursuant to the Note Guarantee and the
Indenture are expressly set forth in Articles 11 and 12 of the Indenture and
reference is hereby made to the Indenture for the precise terms of the Note
Guarantee. Each Holder of a Note, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee, on
behalf of such Holder, to take such action as may be necessary or appropriate to
effectuate the subordination as provided in the Indenture and (c) appoints the
Trustee attorney-in-fact of such Holder for such purpose; provided, however,
that the Indebtedness evidenced by this Note Guarantee shall cease to be so
subordinated and subject in right of payment upon any defeasance of this Note in
accordance with the provisions of the Indenture.
AMERICAN MOBILE SATELLITE CORPORATION
By:
---------------------------------
Name:
Title:
AMERICAN MOBILE SATELLITE SALES CORPORATION
By:
---------------------------------
Name:
Title:
E-1
<PAGE>
AMSC SALES CORPORATION LTD.
By:
---------------------------------
Name:
Title:
AMSC SUBSIDIARY CORPORATION
By:
---------------------------------
Name:
Title:
ARDIS COMPANY
By:
---------------------------------
Name:
Title:
MOTOROLA ARDIS, INC.
By:
---------------------------------
Name:
Title:
MOTOROLA ARDIS ACQUISITION, INC.
By:
---------------------------------
Name:
Title:
E-2
<PAGE>
ARDIS HOLDING COMPANY
By:
---------------------------------
Name:
Title:
RADIO DATA NETWORK HOLDING CORPORATION
By:
---------------------------------
Name:
Title:
E-3
<PAGE>
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
Supplemental Indenture (this "SUPPLEMENTAL INDENTURE"), dated as of
________ __, ____ among __________________ (the "GUARANTEEING SUBSIDIARY"), a
direct or indirect subsidiary of AMSC Acquisition Company, Inc. (or its
permitted successor), a Delaware corporation (the "COMPANY"), the Company, the
other Guarantors (as defined in the Indenture referred to herein) and State
Street Bank and Trust Company, as trustee under the indenture referred to below
(the "TRUSTEE").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "INDENTURE"), dated as of March 31, 1998 providing for
the issuance of an aggregate principal amount of up to $335 million of 12 1/4%
Senior Notes due 2008 (the "NOTES");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "NOTE GUARANTEE"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees
as follows:
(a) Along with all Guarantors named in the Indenture, to jointly and
severally Guarantee to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of
the Indenture, the Notes or the obligations of the Company
hereunder or thereunder, that:
(i) the principal of and interest on the Notes will be promptly
paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful,
and all other obligations of the Company to the Holders or
the Trustee hereunder or thereunder will be promptly paid in
full or performed, all in accordance with the terms hereof
and thereof; and
F-1
<PAGE>
(ii) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, that same will
be promptly paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. Failing
payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay
the same immediately.
(b) The obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Notes or the
Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to
any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor.
(c) The following is hereby waived: diligence presentment, demand
of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all
demands whatsoever.
(d) This Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and the
Indenture.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors, or any
custodian, Trustee, liquidator or other similar official acting
in relation to either the Company or the Guarantors, any amount
paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any right of
subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the Holders and
the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in
Article 6 of the Indenture for the purposes of this Note
Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided in
Article 6 of the Indenture, such obligations (whether or not due
and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Note Guarantee.
(h) The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does
not impair the rights of the Holders under the Guarantee.
F-2
<PAGE>
(i) Pursuant to Section 11.02 of the Indenture, after giving effect
to any maximum amount and any other contingent and fixed
liabilities that are relevant under any applicable Bankruptcy or
fraudulent conveyance laws, and after giving effect to any
collections from, rights to receive contribution from or payments
made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under Article 11 of the
Indenture shall result in the obligations of such Guarantor under
its Note Guarantee not constituting a fraudulent transfer or
conveyance.
3. EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that
the Note Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
(a) The Guaranteeing Subsidiary may not consolidate with or merge with or
into (whether or not such Guarantor is the surviving Person) another
corporation, Person or entity whether or not affiliated with such
Guarantor unless:
(i) subject to Section 11.05 of the Indenture, the Person formed by
or surviving any such consolidation or merger (if other than a
Guarantor or the Company) unconditionally assumes all the
obligations of such Guarantor, pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the Note Guarantee on
the terms set forth herein or therein; and
(ii) immediately after giving effect to such transaction, no Default
or Event of Default exists.
(b) In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in
form to the Trustee, of the Note Guarantee endorsed upon the Notes and
the due and punctual performance of all of the covenants and
conditions of the Indenture to be performed by the Guarantor, such
successor corporation shall succeed to and be substituted for the
Guarantor with the same effect as if it had been named herein as a
Guarantor. Such successor corporation thereupon may cause to be
signed any or all of the Note Guarantees to be endorsed upon all of
the Notes issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee. All the Note
Guarantees so issued shall in all respects have the same legal rank
and benefit under the Indenture as the Note Guarantees theretofore and
thereafter issued in accordance with the terms of the Indenture as
though all of such Note Guarantees had been issued at the date of the
execution hereof.
(c) Except as set forth in Articles 4 and 5 of the Indenture, and
notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or
in any of the Notes shall prevent any consolidation or merger of a Guarantor
with or into the Company or another Guarantor, or shall prevent any sale or
conveyance of the property of a Guarantor as an entirety or substantially as an
entirety to the Company or another Guarantor.
5. RELEASES.
F-3
<PAGE>
(a) In the event of a sale or other disposition of all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, or a sale
or other disposition of all to the capital stock of any Guarantor,
then such Guarantor (in the event of a sale or other disposition, by
way of merger, consolidation or otherwise, of all of the capital stock
of such Guarantor) or the corporation acquiring the property (in the
event of a sale or other disposition of all or substantially all of
the assets of such Guarantor) will be released and relieved of any
obligations under its Note Guarantee; provided that the Net Proceeds
of such sale or other disposition are applied in accordance with the
applicable provisions of the Indenture, including without limitation
Section 4.10 of the Indenture. Upon delivery by the Company to the
Trustee of an Officers' Certificate and an Opinion of Counsel to the
effect that such sale or other disposition was made by the Company in
accordance with the provisions of the Indenture, including without
limitation Section 4.10 of the Indenture, the Trustee shall execute
any documents reasonably required in order to evidence the release of
any Guarantor from its obligations under its Note Guarantee.
(b) Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of any Guarantor
under the Indenture as provided in Article 11 of the Indenture.
6. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Note Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of the
Notes by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Notes. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
8. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
10. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
F-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: ________ __, ____
[GUARANTEEING SUBSIDIARY]
By:
----------------------------
Name:
Title:
AMSC ACQUISITION COMPANY, INC.
By:
----------------------------
Name:
Title:
AMERICAN MOBILE SATELLITE CORPORATION
By:
----------------------------
Name:
Title:
AMERICAN MOBILE SATELLITE SALES CORPORATION
By:
----------------------------
Name:
Title:
AMSC SALES CORPORATION LTD.
By:
----------------------------
Name:
Title:
F-5
<PAGE>
AMSC SUBSIDIARY CORPORATION
By:
----------------------------
Name:
Title:
ARDIS COMPANY
By:
----------------------------
Name:
Title:
MOTOROLA ARDIS, INC.
By:
----------------------------
Name:
Title:
MOTOROLA ARDIS ACQUISITION, INC.
By:
----------------------------
Name:
Title:
ARDIS HOLDING COMPANY
By:
----------------------------
Name:
Title:
F-6
<PAGE>
RADIO DATA NETWORK HOLDING CORPORATION
By:
----------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY
By:
----------------------------
Name:
Title:
F-7
<PAGE>
SCHEDULE I
SCHEDULE OF GUARANTORS
The following schedule lists each Guarantor under the Indenture as of
the Issue Date:
1. American Mobile Satellite Corporation
2. American Mobile Satellite Sales Corporation
3. AMSC Sales Corporation Ltd.
4. AMSC Subsidiary Corporation
5. ARDIS Company
6. Motorola ARDIS, Inc.
7. Motorola ARDIS Acquisition, Inc.
8. ARDIS Holding Company
9. Radio Data Network Holding Corporation
<PAGE>
EXHIBIT 4.2
================================================================================
PLEDGE AND SECURITY AGREEMENT
by and among
AMSC ACQUISITION COMPANY, INC.,
STATE STREET BANK AND TRUST COMPANY,
as Trustee
and
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent
March 31, 1998
================================================================================
<PAGE>
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of March 31, 1998 (the "PLEDGE
AGREEMENT") by and among AMSC Acquisition Company, Inc., a Delaware corporation
(the "PLEDGOR"), the Trustee (as defined below) and State Street Bank and Trust
Company, as collateral agent (the "COLLATERAL AGENT"), for the Trustee on behalf
of the Holders of the Notes (as defined herein). Capitalized terms used but not
otherwise defined herein shall have the meanings given to such terms in the
Indenture (as defined below).
W I T N E S S E T H:
WHEREAS, the Pledgor, the Guarantors (as defined in the Indenture) and
State Street Bank and Trust Company, as Trustee (the "TRUSTEE") have entered
into that certain Indenture dated as of March 31, 1998 (as amended, restated,
supplemented or otherwise modified from time to time, the "INDENTURE"), pursuant
to which the Pledgor and American Mobile Satellite Corporation, a Delaware
corporation ("HOLDINGS" and, together with the Pledgor, the "ISSUERS") issued
335,000 Units consisting of $335,000,000 in aggregate principal amount of
12 1/4% Senior Notes due 2008 (the "NOTES") of the Pledgor and warrants to
purchase an aggregate of 1,258,759 shares of common stock, $.01 par value, of
Holdings (the "WARRANTS"). Each Unit consists of $1,000 principal amount of
Notes and one Warrant to purchase 3.75749 shares of common stock of Holdings;
WHEREAS, the Pledgor has agreed, pursuant to a Purchase Agreement
dated March 26, 1998 by and among the Pledgor, Bear, Stearns & Co. Inc., J.P.
Morgan Securities, Inc., TD Securities (USA) Inc. and BancAmerica Robertson
Stephens, to (i) purchase a portfolio of securities consisting of Government
Securities (as defined) (collectively, the "PLEDGED SECURITIES") in an amount
sufficient, upon receipt of the scheduled interest and principal payments in
respect of the Pledged Securities, in the opinion of a nationally recognized
firm of independent certified public accountants selected by the Pledgor, to
provide for payment of the first six scheduled interest payments due on the
Notes, and (ii) place such Pledged Securities in the Pledge Account (as defined
herein) held by the Collateral Agent for the benefit of the Holders of the
Notes;
WHEREAS, the Pledgor is the sole legal and beneficial owner of the
Pledged Securities; and
WHEREAS, to secure the payment and performance by the Pledgor of its
obligations under the Indenture and the Notes (collectively, the "OBLIGATIONS"),
the Pledgor has agreed to (i) pledge to the Collateral Agent for the benefit of
the Trustee and the ratable benefit of the Holders of the Notes a security
interest in the Pledged Securities and the Pledge Account, and (ii) execute and
deliver this Pledge Agreement.
NOW, THEREFORE, in order to induce the Holders of Notes to purchase
the Notes, and for good and valuable consideration, the receipt of which is
hereby acknowledged, the Pledgor hereby agrees with the Collateral Agent for the
benefit of the Trustee and for the ratable benefit of the Holders of Notes as
follows:
1. DEFINED TERMS. All capitalized terms used but not defined herein
-------------
shall have the meanings ascribed to them in the Indenture. In addition to any
other defined terms used herein, the following terms shall constitute defined
terms for purposes of this Pledge Agreement and shall have the meanings set
forth below:
1
<PAGE>
"COLLATERAL" has the meaning given in Section 2 hereof.
"GOVERNMENT SECURITIES" means securities that are direct obligations
of, or obligations fully guaranteed by, the United States of America for the
payment of which guarantee or obligations the full faith and credit of the
United States is pledged.
"UCC" means, with respect to the validity and perfection and the
effect of perfection or non-perfection of the security interest, the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
2. PLEDGE AND GRANT OF SECURITY INTEREST. (a) The Pledgor hereby
-------------------------------------
pledges and grants to the Collateral Agent as agent of and securities
intermediary for the Trustee, for the ratable benefit of the Holders of the
Notes, a continuing first priority security interest in and to (i) all of the
Pledgor's right, title and interest in the Pledged Securities and the Pledge
Account, (ii) all certificates or other evidence of ownership representing the
Pledged Securities and the Pledge Account, and (iii) all products and proceeds
of any of the Pledged Securities, including, without limitation, all dividends,
interest, principal payments, cash, options, warrants, rights, instruments,
subscriptions and other property or proceeds from time to time received,
receivable or otherwise distributed or distributable in respect of or in
exchange for any or all of the Pledged Securities (collectively, the
"COLLATERAL").
(b) The Pledgor shall have no right to remove or withdraw from the
Pledge Account any financial asset, cash or other property now or hereafter
credited to the Pledge Account without the prior written consent of the Trustee.
If at any time the Collateral Agent shall receive any entitlement order from the
Trustee (including, without limitation, any order directing the sale, transfer
or redemption of any financial asset relating to, or cash or other item credited
to, the Pledge Account), the Collateral Agent shall comply with such entitlement
order, without further consent by the Pledgor or any other Person.
(c) The Trustee appoints State Street Bank and Trust Company as its
agent and securities intermediary hereunder, and the Collateral Agent accepts
such appointment and agrees to act as agent and securities intermediary for the
Trustee with respect to the Pledged Securities, without cost or expense to the
Trustee. The Collateral Agent will, no later than the business day immediately
following the date hereof, completely and accurately identify on its books and
records the Pledged Securities being held in the Pledge Account. In addition,
the collateral Agent will, upon the Trustee's written request given at any time
to the Collateral Agent, either (a) deliver to the Trustee possession of duly
issued certificates evidencing the Pledged Securities registered in the name of
the Trustee or its nominee or designee, or (b) transfer the Pledged Securities
to an account at the Collateral Agent or to another financial intermediary
designated by the Trustee in the name of the Trustee. In the event that the
Pledgor shall be entitled to receive or acquire any distribution, in any form
whatsoever, including, without limitation, cash and non-cash dividends and
interest, in respect of the Pledged Securities, the Collateral Agent agrees that
it shall hold the same as agent and securities intermediary for the Trustee
subject to the terms hereof and the written instructions of the Trustee.
3. SECURITY FOR OBLIGATIONS. This Pledge Agreement and the
------------------------
Collateral secure the prompt and complete payment and performance when due
(whether at stated maturity, by acceleration or otherwise) of all of the
Obligations.
2
<PAGE>
4. DELIVERY OF COLLATERAL; PLEDGE ACCOUNT; INTEREST; SUBSTITUTION OF
-----------------------------------------------------------------
COLLATERAL.
- ----------
(a) If and to the extent the Pledged Securities comprise "certificated
securities," as defined in Section 8-102 of the UCC, such securities shall be
registered in the name of the Collateral Agent or its nominee for the benefit of
the Holders of the Notes and delivered to the Collateral Agent or its custodian
in the State of New York, and possession thereof shall be maintained by the
Collateral Agent within the State of New York.
(b) All Government Securities included in the Collateral shall be
registered in the name of the Collateral Agent or its nominee for the benefit of
the Holders of the Notes on the records of the Federal Reserve Bank of New York
and credited in the books and records of the Collateral Agent to the Pledge
Account. All other uncertificated securities, if any, included in the
Collateral shall be registered on the books of the issuer of such uncertificated
securities in the name of the Collateral Agent or its nominee for the benefit of
the Holders of the Notes, and credited in the books and records of the
Collateral Agent to the Pledge Account.
(c) Concurrently with the execution and delivery of this Pledge
Agreement, the Collateral Agent shall establish an account entitled the "STATE
STREET BANK AND TRUST COMPANY PLEDGE ACCOUNT FOR THE BENEFIT OF HOLDERS OF
12 1/4% SENIOR NOTES DUE 2008 OF AMSC ACQUISITION COMPANY, INC." for the deposit
of the Pledged Securities (the "PLEDGE ACCOUNT") at its office at Goodwin
Square, 225 Asylum Street, Hartford, Connecticut, 06103. The Pledge Account is
and shall be maintained as a "securities account" within the meaning of Article
8 of the UCC, and the Collateral Agent will treat all property held by it in the
Pledge Account as "financial assets" under Article 8-501(a) of the UCC. Subject
to the other terms and conditions of this Pledge Agreement, all funds or other
property accepted by the Collateral Agent pursuant to this Pledge Agreement
shall be held in the Pledge Account for the ratable benefit of the Holders of
the Notes. All proceeds of the Pledged Securities shall remain on deposit in the
Pledge Account until withdrawn in accordance with this Pledge Agreement.
(d) All proceeds of, interest earned on and other distributions or
amounts paid with respect to, any Collateral shall be credited to and retained
in the Pledge Account, and the Collateral Agent shall invest and reinvest the
same as directed from time to time in writing by the Pledgor; provided, however,
that such proceeds and other amounts must be invested in Government Securities
except as otherwise provided in this Section 4(d). Prior to the Collateral
Agent's receipt of written instructions from the Pledgor, the Collateral Agent
shall invest any such proceeds and other amounts in Federated Investors Treasury
Cash Service Fund. In all events, any monies so invested or reinvested and any
securities acquired thereby shall be (i) held as Collateral in the Pledge
Account, (ii) subject in all respects to the security interest created hereby
and shall be and remain under the control of the Collateral Agent, and (iii)
otherwise subject to the terms hereof.
5. DISBURSEMENTS.
-------------
(a) Unless notified at least one Business Day in advance of an
Interest Payment Date of the Pledgor's election pursuant to Section 5(b), on the
date when each of the first six scheduled interest payments is due on the Notes
and without notice from the Pledgor, the Collateral Agent shall transfer from
the Pledge Account to the Paying Agent under the Indenture, funds necessary to
provide for payment in full or of any portion of the next scheduled interest
payment on the Notes and the Paying Agent shall apply the proceeds to such
interest payment.
(b) If the Pledgor elects to pay any of the first six scheduled
interest payments (or portion thereof) on the Notes from a source of funds other
than the Pledge Account (the "PLEDGOR'S FUNDS"), then the Pledgor may, after
payment in full of such interest payment, deliver to the Collateral
3
<PAGE>
Agent written acknowledgment from the Paying Agent of its receipt of such funds,
together with a written request for release of a portion of Collateral not in
excess of the Pledgor's Funds so paid, whereupon the Collateral Agent is hereby
authorized and directed to release to the Pledgor an amount of funds from the
Pledge Account less than or equal to the amount of Pledgor Funds so expended.
Upon receipt of such written direction from the Pledgor, together with the
certificate described in the following sentence, the Collateral Agent shall take
such action as is necessary to provide for the payment to the Pledgor of the
amount requested from the Pledge Account. Prior to any release of funds to the
Pledgor from the Pledge Account pursuant to this Section 5(b), the Pledgor shall
deliver to the Collateral Agent an Officer's Certificate stating that such use
of Pledgor's Funds has been duly authorized by all necessary corporate action
and does not contravene or constitute a default under any provision of
applicable law, regulation or the certificate of incorporation of the Pledgor,
or of any material agreement, judgment, injunction, order, decree or other
instrument binding upon the Pledgor, and does not result in the creation or
imposition of any Lien on any asset of the Pledgor.
(c) If at any time the amount of Collateral exceeds the amount
sufficient, in the opinion of a nationally recognized firm of independent
certified public accountants selected by the Pledgor, to provide for payment in
full of the first six scheduled interest payments due on the Notes (or, in the
event any interest payments have been made on the Notes, an amount sufficient to
provide for payment in full of all interest payments then remaining up to and
including the sixth scheduled interest payment), the Pledgor may direct the
Collateral Agent in writing to release to the Pledgor or as it directs, an
amount less than or equal to such excess. Upon receipt of such written direction
from the Pledgor, together with the opinion of a nationally recognized firm of
independent certified public accountants with respect to the value of the
Pledged Securities, the Collateral Agent shall take such action as is necessary
to provide for the payment to the Pledgor of the amount requested from the
Pledge Account.
(d) Upon payment in full of the first six scheduled interest payments
on the Notes, the security interest in the Collateral evidenced by this Pledge
Agreement shall terminate and be of no further force and effect, and any and all
Collateral in the Pledge Account shall be released and transferred by the
Collateral Agent to the Pledgor in accordance with the Pledgor's instructions.
Furthermore, upon release of any Collateral from the Pledge Account in
accordance with the terms of this Pledge Agreement, whether upon release of
Collateral to the Paying Agent, to the Pledgor or otherwise, the security
interest evidenced by this Pledge Agreement in the Collateral so released shall
terminate and be of no further force and effect.
6. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby represents and
------------------------------
warrants that:
(a) The execution, delivery and performance by the Pledgor of this
Pledge Agreement has been duly authorized by all necessary corporate action and
does not contravene or constitute a default under any provision of applicable
law, regulation or the certificate of incorporation or the bylaws of the
Pledgor, or of any judgment, injunction, order, decree or any material agreement
or instrument binding upon the Pledgor, and does not result in the creation or
imposition of any Lien on any asset of the Pledgor, except for the security
interests granted under this Pledge Agreement.
(b) The Pledgor is the record and beneficial owner of the Collateral,
free and clear of any Lien or claims of any Person (except for the security
interest granted under this Pledge Agreement). No financing statement covering
the Pledged Securities is on file in any public office, other than financing
statements filed pursuant to this Pledge Agreement. This Pledge Agreement has
been duly executed and delivered by the Pledgor and constitutes a valid and
binding obligation of the Pledgor, enforceable against the Pledgor in accordance
with its terms, except as such enforceability may be
4
<PAGE>
limited by the effect of any applicable bankruptcy, insolvency, reorganization,
fraudulent conveyances, moratorium or other similar laws affecting creditors'
rights generally or general principles of equity.
(c) Upon the delivery to the Collateral Agent of the certificates, if
any, representing the Pledged Securities, any filing of financing statements
required by the UCC and notation on the records of the Collateral Agent that it
holds the Pledged Securities as pledgee, the pledge of the Collateral pursuant
to this Pledge Agreement creates a valid and perfected first priority security
interest in and to the Collateral, securing the payment and performance of the
Obligations for the ratable benefit of the Holders of the Notes, enforceable as
such against all creditors of the Pledgor and any Persons purporting to purchase
any of the Collateral from the Pledgor.
(d) No consent of any other Person and no consent, authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority or regulatory body, is required either (i) for the pledge by the
Pledgor of the Collateral pursuant to this Pledge Agreement or for the
execution, delivery or performance of this Pledge Agreement by the Pledgor
(except for any filings and notations necessary to perfect the security interest
created hereby in the Collateral) or (ii) for the exercise by the Collateral
Agent of the rights provided for in this Pledge Agreement or the remedies in
respect of the Collateral pursuant to this Pledge Agreement. No litigation,
proceeding or investigation of or before any arbitrator or governmental
authority is pending or, to the knowledge of the Pledgor, threatened by or
against the Pledgor with respect to this Pledge Agreement or any of the
transactions contemplated hereby.
(e) The pledge of the Collateral pursuant to this Pledge Agreement is
not prohibited by any applicable law or government regulation, release,
interpretation or opinion of the Board of Governors of the Federal Reserve
System or other regulatory agency (including, without limitation, Regulations G,
T, U and X of the Board of Governors of the Federal Reserve System).
7. FURTHER ASSURANCES. The Pledgor agrees promptly to take such
------------------
actions and to execute and deliver or cause to be executed and delivered, or use
its best efforts to procure, such stock or bond powers, proxies, assignments,
instruments and such other or different writings as the Collateral Agent may
reasonably request, all in form and substance satisfactory to the Collateral
Agent, deliver any instruments to the Collateral Agent and take any other
actions that are necessary or, in the opinion of the Collateral Agent,
desirable, to perfect, continue the perfection of, confirm and assure the first
priority of the Collateral Agent's security interest in the Collateral, to
protect the Collateral against the rights, claims or interests of third persons,
or to otherwise effect the purposes of this Pledge Agreement. The Pledgor also
hereby authorizes the Collateral Agent to file any financing or continuation
statements with respect to the Collateral without the signature of the Pledgor
(to the extent permitted by applicable law). The Pledgor will pay all costs
incurred by the Collateral Agent in connection with any of the foregoing.
8. COVENANTS. The Pledgor covenants and agrees with the Collateral
---------
Agent and the Holders of the Notes from and after the date of this Pledge
Agreement until the earlier of payment in full in cash of (A) each of the first
six scheduled interest payments due on the Notes under the terms of the
Indenture or (B) all Obligations due and owing under the Indenture and the Notes
in the event such Obligations become due and payable prior to the payment of the
first six scheduled interest payments on the Notes, as follows:
(a) The Pledgor agrees that it (i) will not sell or otherwise dispose
of, or grant any option or other interest with respect to, any of the
Collateral, (ii) will not create or permit to exist any Lien upon or with
respect to any of the Collateral, except for the Liens created pursuant to this
Pledge Agreement, and (iii) will at all times be the sole beneficial owner of
the Collateral.
5
<PAGE>
(b) The Pledgor agrees that it will not (i) enter into any agreement
or understanding that purports to or may restrict or inhibit the Collateral
Agent's rights or remedies hereunder, including, without limitation, the
Collateral Agent's right to sell or otherwise dispose of the Collateral, or (ii)
with regard to the Collateral, fail to pay or discharge any tax, assessment or
levy of any nature due with respect thereto later than five days prior to the
date of any proposed sale under any judgment, writ or warrant of attachment.
9. POWER OF ATTORNEY.
-----------------
(a) The Pledgor hereby appoints and constitutes the Collateral Agent
as the Pledgor's attorney-in-fact with full power of substitution to exercise to
the fullest extent permitted by law all of the following powers upon and at any
time after the occurrence and during the continuance of an Event of Default:
(i) collection of proceeds of any Collateral;
(ii) conveyance of any item of Collateral to any purchaser thereof as
specified herein;
(iii) giving of any notices or recording of any Liens pursuant to
Section 7 hereof;
(iv) making any payments or taking any acts pursuant to Section 10
hereof;
(v) paying or discharging taxes or Liens levied or placed upon the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Collateral Agent in its sole
discretion, and any such payments made by the Collateral Agent shall become
Obligations of the Pledgor to the Collateral Agent, due and payable immediately
upon demand; and
(vi) taking any acts pursuant to Section 13 hereof.
(b) The Collateral Agent's authority under this Section 9 shall
include, without limitation, the authority to endorse and negotiate any checks
or instruments representing proceeds of Collateral in the name of the Pledgor,
execute and give receipt for any certificate of ownership or any document
constituting Collateral, transfer title to any item of Collateral, to the extent
permitted by applicable law, sign the Pledgor's names on all financing
statements or any other documents deemed necessary or appropriate by the
Collateral Agent to preserve, process or perfect the security interest in the
Collateral, and to file the same, and to prepare, sign the Pledgor's name and
file any notice of Lien, and to take any other actions arising from or incident
to the powers granted to the Collateral Agent in this Pledge Agreement. This
power of attorney is coupled with an interest and shall be irrevocable by the
Pledgor.
(c) The Pledgor acknowledges that the rights and responsibilities of
the Collateral Agent under this Pledge Agreement with respect to any action
taken by the Collateral Agent or the exercise or non-exercise by the Collateral
Agent of any option, right, request, judgment or other right or remedy provided
for herein or resulting or arising out of this Pledge Agreement shall, as
between the Collateral Agent and the Holders of the Notes, be governed by this
Pledge Agreement, but, as between the Collateral Agent and the Pledgor, the
Collateral Agent shall be conclusively presumed to be acting as agent for the
Holders of the Notes with full and valid authority so to act or refrain from
acting, and the Pledgor shall not be obligated or entitled to make any inquiry
respecting such authority.
6
<PAGE>
(d) The Collateral Agent undertakes to perform such duties and only
such duties as are specifically set forth in this Pledge Agreement and no
implied covenants or obligations shall be read into this Pledge Agreement
against the Collateral Agent. The Collateral Agent shall not be deemed to have
knowledge of an Event of Default under the Indenture unless informed in writing
by the Pledgor or the Holder of any Note.
(e) The Collateral Agent shall not be required to exercise any
remedies hereunder unless requested in writing to do so by the Holders of a
majority in principal amount of the outstanding Notes and only if furnished with
indemnity reasonably satisfactory to the Collateral Agent. The Collateral Agent
may consult with counsel and shall not be liable for any action taken in good
faith in reliance upon advice of counsel except for gross negligence or willful
misconduct. The Collateral Agent makes no representation or warranty and shall
have not responsibility concerning the value or validity of the Collateral or
the validity or perfection of the pledge thereof or any security interest
therein. The provisions of Section 7.02(a)-(f) of the Indenture are
incorporated herein mutatis mutandi.
(f) The Collateral Agent may at any time on 30 days notice to the
Pledgor and the Holders of the Notes resign hereunder. Upon any such
resignation the Pledgor shall promptly appoint another financial institution
reasonably satisfactory to the Holders of a majority in principal amount or the
outstanding Notes to act as Collateral Agent hereunder and such resignation
shall become effective upon the acceptance of the appointment by the successor.
(g) The Collateral Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which a prudent
financial institution similarly situated would accord its own property, it being
understood that neither the Collateral Agent nor the Holders of the Notes shall
have responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not any such Person has or is deemed to have knowledge of
such matters, or (ii) taking any necessary steps to preserve rights against any
parties with respect to any Collateral.
10. COLLATERAL AGENT MAY PERFORM. If the Pledgor fails to perform
----------------------------
any agreement contained herein, the Collateral Agent may, but shall not be
obligated to, itself perform or cause performance of such agreement, and the
expenses incurred by or on behalf of the Collateral Agent in connection
therewith shall be payable by the Pledgor under Section 14 hereof.
11. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and powers
----------------------------------------
granted to the Collateral Agent hereunder are being granted in order to preserve
and protect the security interest of the Collateral Agent and the Holders of
Notes in and to the Collateral granted hereby and shall not be interpreted to,
and shall not, impose any duties on the Collateral Agent in connection therewith
other than those imposed under applicable law.
12. INDEMNITY. The Pledgor shall indemnify, defend and hold harmless
---------
the Collateral Agent and its directors, officers, agents and employees from and
against all claims, actions, obligations, losses, liabilities and expenses,
including costs, fees and disbursements of counsel, the costs of investigations,
and claims for damages, arising from the Collateral Agent's performance under
this Pledge Agreement, except insofar as the same may have been caused by the
bad faith, gross negligence or willful misconduct of such indemnified Person.
The obligations of the Pledgor under this Section 12 shall survive the
resignation or removal of the Collateral Agent or the termination of this Pledge
Agreement.
7
<PAGE>
13. REMEDIES UPON EVENT OF DEFAULT. If an Event of Default shall
------------------------------
have occurred:
(a) Upon the acceleration of the Notes in accordance with the terms of
the Indenture, the Collateral Agent shall have and may exercise with reference
to the Collateral any or all of the rights and remedies of a secured party under
the UCC, and as otherwise granted herein or under any other applicable law or
under any other agreement executed by Pledgor, including, without limitation,
the right and power to sell, at public or private sale or sales, or otherwise
dispose of, or otherwise utilize the Collateral and any part or parts thereof,
in any manner authorized or permitted under the UCC after default by a debtor,
and to apply the proceeds thereof toward payment of any costs and expenses and
attorneys' fees and expenses thereby incurred by the Collateral Agent and toward
payment of the Obligations in such order or manner as the Collateral Agent may
elect. The purchaser of any or all Collateral so sold shall thereafter hold the
same absolutely, free from any claim, encumbrance or right of any kind
whatsoever created by or through the Pledgor. Unless any of the Collateral
threatens, in the reasonable judgment of the Collateral Agent, to decline
speedily in value or is or becomes of a type sold on a recognized market, the
Collateral Agent shall give the Pledgor reasonable notice of the time and place
of any public sale thereof, or of the time after which any private sale or other
intended disposition is to be made. Any sale of the Collateral conducted in
conformity with reasonable commercial practices of banks, insurance companies,
commercial finance companies, or other financial institutions disposing of
property similar to the Collateral shall be deemed to be commercially
reasonable. Any requirements of reasonable notice shall be met if such notice
is mailed to the Pledgor as provided in Section 17 herein, at least fifteen (15)
days before the time of the sale or disposition. The Collateral Agent or any
Holder of Notes may, in its own name or in the name of a designee or nominee,
buy any of the Collateral at any public sale and, if permitted by applicable
law, at any private sale. All expenses (including court costs and reasonable
attorneys' fees, expenses and disbursements) of, or incident to, the enforcement
of any of the provisions hereof shall be recoverable from the proceeds of the
sale or other disposition of the Collateral.
(b) The Pledgor further agrees to use its best efforts to do or cause
to be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Collateral pursuant to this Section 13 valid and
binding and in compliance with any and all other applicable requirements of law.
The Pledgor further agrees that a breach of any of the covenants contained in
this Section 13 will cause irreparable injury to the Collateral Agent and the
Holders of Notes, that the Collateral Agent and the Holders of Notes have no
adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 13 shall be specifically
enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance of such
covenants, except for a defense that no Event of Default has occurred.
(c) All rights to marshaling of assets of the Pledgor, including any
such right with respect to the Collateral, are hereby waived by the Pledgor.
The Pledgor shall not contest or support any other Person in contesting the
validity or priority of the security interests created under this Pledge
Agreement.
14. FEES AND EXPENSES. The Pledgor shall, upon demand, pay to the
-----------------
Collateral Agent the amount of its fees (which shall be in an amount previously
agreed by the Pledgor and the Collateral Agent) and any and all expenses
(including, without limitation, the reasonable fees, expenses and disbursements
of counsel, experts and agents retained by the Collateral Agent) that the
Collateral Agent may incur in connection with (i) the administration of this
Pledge Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
8
<PAGE>
exercise or enforcement of any of the rights of the Collateral Agent and the
Holders of the Notes hereunder, or (iv) the failure by the Pledgor to perform or
observe any of the provisions hereof.
15. SECURITY INTEREST ABSOLUTE. All rights of the Collateral Agent
--------------------------
and the Holders of the Notes, and the security interests created hereunder, and
all obligations of the Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Indenture or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Indenture;
(c) any exchange, surrender, release or non-perfection of any Liens on
any other Collateral for all or any of the Obligations; or
(d) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Pledgor in respect of the Obligations or of
this Pledge Agreement.
16. AUTHORITY OF THE COLLATERAL AGENT. The Collateral Agent shall
---------------------------------
have and be entitled to exercise all powers hereunder that are specifically
granted to the Collateral Agent by the terms hereof, together with such powers
as are incident thereto. The Collateral Agent may perform any of its duties
hereunder or in connection with the Collateral by or through agents or employees
and shall be entitled to retain counsel and to act in reliance upon the advice
of counsel concerning all such matters. None of the Collateral Agent, any
director, officer, employee, attorney or agent of the Collateral Agent nor the
Holders of the Notes shall be liable to the Pledgor for any action taken or
omitted to be taken by it or them hereunder, except for its own bad faith, gross
negligence or willful misconduct, nor shall the Collateral Agent be responsible
for the validity, effectiveness or sufficiency hereof or of any document or
security furnished pursuant hereto. The Collateral Agent and its directors,
officers, employees, attorneys and agents shall be entitled to rely on any
communication, instrument or document believed by it or them to be genuine and
correct and to have been signed or sent by the proper Person or Persons. The
Collateral Agent and its directors, officers, employees, attorneys and agents
shall be entitled to rely on the opinion of a nationally recognized firm of
independent certified public accountants with respect to the dollar amount of
the Pledged Securities.
17. NOTICES. Any communication, notice or demand to be given
-------
hereunder shall be duly given hereunder if given in the form and manner, and
delivered to the address set forth in the Indenture, or in such other form and
manner or to such other address as shall be designated by any party hereto to
each other party hereto in a written notice delivered in accordance with the
terms of the Indenture.
18. NO WAIVER; CUMULATIVE RIGHTS. No failure on the part of the
----------------------------
Collateral Agent to exercise, and no delay in exercising, any right, remedy or
power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise by the Collateral Agent of any right, remedy or power hereunder
preclude any other or future exercise of any other right, remedy or power. Each
and every right, remedy and power hereby granted to the Collateral Agent or
allowed it by law or other agreement shall be cumulative and not exclusive the
one of any other, and may be exercised by the Collateral Agent from time to
time.
9
<PAGE>
19. BENEFITS OF PLEDGE AGREEMENT. Nothing in this Pledge Agreement,
----------------------------
whether express or implied, shall give to any Person other than the parties
hereto and their successors hereunder, and the Holders of the Notes, any benefit
or any legal or equitable right, remedy or claim under this Pledge Agreement.
20. APPLICABLE LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
-------------------------------------------------------------
(a) THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK. TO INDUCE THE ESCROW AGENT TO ENTER INTO THIS PLEDGE
AGREEMENT, THE PLEDGOR HEREBY IRREVOCABLY AGREES THAT, SUBJECT TO THE ESCROW
AGENT'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS THAT IN ANY
MANNER ARISE OUT OF OR IN CONNECTION WITH OR ARE IN ANY WAY RELATED TO THIS
PLEDGE AGREEMENT SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE COUNTY OF
NEW YORK, STATE OF NEW YORK. THE PLEDGOR HEREBY CONSENTS TO THE JURISDICTION OF
ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW
YORK. THE PLEDGOR HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL TO THE PLEDGOR'S NOTICE ADDRESS
AS SPECIFIED HEREIN. THE PLEDGOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO
TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BETWEEN THE PLEDGOR AND THE
ESCROW AGENT IN ACCORDANCE WITH THIS PARAGRAPH. EACH OF THE PLEDGOR AND THE
ESCROW AGENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING THAT IN ANY MANNER ARISES OUT OF OR IN
CONNECTION WITH OR IS IN ANY WAY RELATED TO THIS PLEDGE AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN.
(b) THE PROVISIONS OF THIS SECTION 20 ARE A MATERIAL INDUCEMENT FOR
THE ESCROW AGENT ENTERING INTO THIS PLEDGE AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY. THE PLEDGOR HEREBY ACKNOWLEDGES THAT IT HAS REVIEWED THE
PROVISIONS OF THIS SECTION 20 WITH INDEPENDENT COUNSEL.
21. CALCULATION OF INTEREST. For purposes of this Pledge Agreement,
-----------------------
all calculations of the first six scheduled interest payments on the Notes shall
be calculated on the basis that interest will accrue on the Notes at the rate of
12 1/4% per annum and will be payable semi-annually in arrears on October 1,
1998, April 1, 1999, October 1, 1999, April 1, 2000, October 1, 2000 and April
1, 2001. Interest on the Notes will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
22. EXECUTION IN COUNTERPARTS. This Pledge Agreement may be executed
-------------------------
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute one and the same instrument.
23. SETTLEMENT. Amounts, if any, held in the Pledge Account pending
----------
settlement of purchase of the Pledged Securities shall constitute Collateral
hereunder, shall be held by the Collateral Agent for the benefit of the Holders
of the Notes and a portion thereof equal to the aggregate price paid for such
Pledged Securities shall be released by the Collateral Agent (without further
direction or instruction required from any other party hereto) against delivery
of such Pledged Securities, and any
10
<PAGE>
excess funds remaining in the Pledge Account after giving effect to such
settlement shall be promptly forwarded pursuant to written instructions of the
Company.
[Signature page(s) follow]
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Pledge and Collateral Agreement as of the day first written above.
AMSC ACQUISITION COMPANY, INC.,
as Pledgor
By:
---------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
---------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent
By:
---------------------------
Name:
Title:
Pledge and Security Agreement signature page(s)
<PAGE>
EXHIBIT 4.3
================================================================================
DEBT REGISTRATION RIGHTS AGREEMENT
MARCH 31, 1998
------------------------------------
by and among
AMSC ACQUISITION COMPANY, INC.,
THE GUARANTORS NAMED ON
THE SIGNATURE PAGES HERETO
and
BEAR, STEARNS & CO. INC.
J.P. MORGAN SECURITIES INC.
TD SECURITIES (USA) INC.
AND
BANCAMERICA ROBERTSON STEPHENS
------------------------------------
================================================================================
<PAGE>
This Debt Registration Rights Agreement (this "Agreement") is made and
entered into as of March 31, 1998, by and among AMSC Acquisition Company, Inc.,
a Delaware corporation (the "Company"), American Mobile Satellite Corporation, a
Delaware corporation, ("Holdings"), American Mobile Satellite Sales Corporation,
AMSC Sales Corporation Ltd., AMSC Subsidiary Corporation, ARDIS Company,
Motorola ARDIS, Inc., Motorola ARDIS Acquisition, Inc., ARDIS Holding Company,
and Radio Data Network Holding Corporation (collectively, together with
Holdings, the "Guarantors"), and Bear Stearns & Co. Inc., J.P. Morgan Securities
Inc., TD Securities (USA) Inc. and BancAmerica Robertson Stephens (each an
"Initial Purchaser" and, collectively, the "Initial Purchasers"), each of whom
has agreed to purchase the Company's 12 1/4% Senior Notes due 2008 (the "Series
A Notes") pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated March 26,
1998, (the "Purchase Agreement"), by and among the Company, the Guarantors and
the Initial Purchasers. In order to induce the Initial Purchasers to purchase
the Series A Notes, the Company and the Guarantors have agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the obligations of the Initial Purchasers set
forth in Section 8(n) of the Purchase Agreement. Capitalized terms used herein
and not otherwise defined shall have the meaning assigned to them in the
Indenture, dated March 31, 1998, among the Company, the Guarantors and State
Street Bank and Trust Company, as Trustee, relating to the Series A and Series B
Notes (the "Indenture").
The parties hereby agree as follows:
DEFINITIONS.
As used in this Agreement, the following capitalized terms shall have the
following meanings:
ACT: The Securities Act of 1933, as amended.
AFFILIATE: As defined in Rule 144 of the Act.
BROKER-DEALER: Any broker or dealer registered under the Exchange Act.
CERTIFICATED SECURITIES: Definitive Notes, as defined in the Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Series B
Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange
Offer Registration Statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the period required pursuant to
Section 3(b) hereof and (c) the delivery by the Company to the Registrar under
the Indenture of Series B Notes in the same aggregate principal amount as the
aggregate principal amount of Series A Notes tendered by Holders thereof
pursuant to the Exchange Offer.
CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.
EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a) hereof.
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<PAGE>
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The exchange and issuance by the Company of a principal
amount of Series B Notes (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the outstanding principal amount of
Series A Notes that are tendered by such Holders in connection with such
exchange and issuance.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchasers propose
to sell the Series A Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act and pursuant to Regulation S under
the Act.
FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
HOLDERS: As defined in Section 2 hereof.
PROSPECTUS: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
RECOMMENCEMENT DATE: As defined in Section 6(d) hereof.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company and the
Guarantors relating to (a) an offering of Series B Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, in each case, (i) that is filed
pursuant to the provisions of this Agreement and (ii) including the Prospectus
included therein, all amendments and supplements thereto (including post-
effective amendments) and all exhibits and material incorporated by reference
therein.
REGULATION S: Regulation S promulgated under the Act.
RULE 144: Rule 144 promulgated under the Act.
SERIES B NOTES: The Company's 12 1/4% Senior Notes due 2008 to be issued
pursuant to the Indenture: (i) in the Exchange Offer or (ii) as contemplated by
Section 4 hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
SUSPENSION NOTICE: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Series A Note, until the earliest to
occur of (a) the date on which such Series A Note is exchanged in the Exchange
Offer for a Series B Note which is entitled to be resold to the public by the
Holder thereof without complying with the prospectus delivery requirements
-2-
<PAGE>
of the Act, (b) the date on which such Series A Note has been disposed of in
accordance with a Shelf Registration Statement (and the purchasers thereof have
been issued Series B Notes), or (c) the date on which such Note is distributed
to the public pursuant to Rule 144 under the Act (and purchasers thereof have
been issued Series B Notes) and each Series B Note until the date on which such
Series B Note is disposed of by a Broker-Dealer pursuant to the "Plan of
Distribution" contemplated by the Exchange Offer Registration Statement
(including the delivery of the Prospectus contained therein).
SECTION 1. HOLDERS.
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "HOLDER") whenever such Person owns Transfer Restricted Securities.
SECTION 2. REGISTERED EXCHANGE OFFER.
(a) Unless the Exchange Offer shall not be permitted by applicable federal law
(after the procedures set forth in Section 6(a)(i) below have been complied
with), the Company and the Guarantors shall (i) cause the Exchange Offer
Registration Statement to be filed with the Commission as soon as
practicable after the Closing Date, but in no event later than 45 days
after the Closing Date (such 45th day being the "FILING DEADLINE"), (ii)
use its best efforts to cause such Exchange Offer Registration Statement to
become effective at the earliest possible time, but in no event later than
135 days after the Closing Date (such 135th day being the "EFFECTIVENESS
DEADLINE"), (iii) in connection with the foregoing, (A) file all pre-
effective amendments to such Exchange Offer Registration Statement as may
be necessary in order to cause it to become effective, (B) file, if
applicable, a post-effective amendment to such Exchange Offer Registration
Statement pursuant to Rule 430A under the Act and (C) cause all necessary
filings, if any, in connection with the registration and qualification of
the Series B Notes to be made under the Blue Sky laws of such jurisdictions
as are necessary to permit Consummation of the Exchange Offer, and (iv)
upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on
the appropriate form permitting (i) registration of the Series B Notes to
be offered in exchange for the Notes that are Transfer Restricted
Securities and (ii) resales of Series B Notes by Broker-Dealers that
tendered into the Exchange Offer for Series A Notes that such Broker-Dealer
acquired for its own account as a result of market making activities or
other trading activities (other than Series A Notes acquired directly from
the Company or any of its Affiliates) as contemplated by Section 3(c)
below.
(b) The Company and the Guarantors shall use their respective best efforts to
cause the Exchange Offer Registration Statement to be effective
continuously, and shall keep the Exchange Offer open for a period of not
less than the minimum period required under applicable federal and state
securities laws to Consummate the Exchange Offer; provided, however, that
in no event shall such period be less than 20 Business Days. The Company
and the Guarantors shall cause the Exchange Offer to comply with all
applicable federal and state securities laws. No securities other than the
Series B Notes shall be included in the Exchange Offer Registration
Statement. The Company and the Guarantors shall use their respective best
efforts to cause the Exchange Offer to be Consummated on the earliest
practicable date after the Exchange Offer Registration Statement has become
effective, but in no event later than 30 Business Days thereafter (such
30th day being the "CONSUMMATION DEADLINE").
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and
indicate therein that any Broker-Dealer who holds Transfer Restricted
Securities that were acquired for the account of such Broker-Dealer as a
result of market-making activities or other trading activities (other than
Series A Notes acquired directly from the Company or any Affiliate of the
Company), may exchange such Transfer Restricted Securities pursuant to the
-3-
<PAGE>
Exchange Offer. Such "Plan of Distribution" section shall also contain all
other information with respect to such sales by such Broker-Dealers that
the Commission may require in order to permit such sales pursuant thereto,
but such "Plan of Distribution" shall not name any such Broker-Dealer or
disclose the amount of Transfer Restricted Securities held by any such
Broker-Dealer, except to the extent required by the Commission as a result
of a change in policy, rules or regulations after the date of this
Agreement. See the Shearman & Sterling no-action letter (available July 2,
1993).
Because such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Company and
Guarantors shall permit the use of the Prospectus contained in the Exchange
Offer Registration Statement by such Broker-Dealer to satisfy such prospectus
delivery requirement. To the extent necessary to ensure that the prospectus
contained in the Exchange Offer Registration Statement is available for sales of
Series B Notes by Broker-Dealers, the Company and the Guarantors agree to use
their respective best efforts to keep the Exchange Offer Registration Statement
continuously effective, supplemented, amended and current as required by and
subject to the provisions of Section 6(a) and (c) hereof and in conformity with
the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of
one year from the Consummation Deadline or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Registration Statement
have been sold pursuant thereto. The Company and the Guarantors shall promptly
provide sufficient copies of the latest version of such Prospectus to such
Broker-Dealers, promptly upon request, and in no event later than one day after
such request, at any time during such period.
SECTION 3. SHELF REGISTRATION.
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
------------------
applicable law (after the Company and the Guarantors have complied with the
procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of
Transfer Restricted Securities shall notify the Company within 20 Business
Days following the Consummation Deadline that (A) such Holder was
prohibited by law or Commission policy from participating in the Exchange
Offer or (B) such Holder may not resell the Series B Notes acquired by it
in the Exchange Offer to the public without delivering a prospectus and the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder or (C) such Holder
is a Broker-Dealer and holds Series A Notes acquired directly from the
Company or any of its Affiliates, then the Company and the Guarantors
shall:
(x) cause to be filed, on or prior to 30 days after the earlier
of (i) the date on which the Company determines that the Exchange Offer
Registration Statement cannot be filed as a result of clause (a)(i) above
and (ii) the date on which the Company receives the notice specified in
clause (a)(ii) above, (such earlier date, the "FILING DEADLINE"), a shelf
registration statement pursuant to Rule 415 under the Act (which may be an
amendment to the Exchange Offer Registration Statement (the "SHELF
REGISTRATION STATEMENT")), relating to all Transfer Restricted Securities,
and
(y) shall use their respective best efforts to cause such Shelf
Registration Statement to become effective on or prior to 105 days after
the Filing Deadline for the Shelf Registration Statement (such 105th day
the "EFFECTIVENESS DEADLINE").
If, after the Company has filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) above, the Company is required
to file and make effective a Shelf Registration Statement solely because the
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<PAGE>
Exchange Offer is not permitted under applicable federal law (i.e., clause
(a)(i) above), then the filing of the Exchange Offer Registration Statement
shall be deemed to satisfy the requirements of clause (x) above; provided that,
in such event, the Company shall remain obligated to meet the Effectiveness
Deadline set forth in clause (y).
To the extent necessary to ensure that the Shelf Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Company and
the Guarantors shall use their respective best efforts to keep any Shelf
Registration Statement required by this Section 4(a) continuously effective,
supplemented, amended and current as required by and subject to the provisions
of Sections 6(b) and (c) hereof and in conformity with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years (as extended
pursuant to Section 6(c)(i)) following the Closing Date, or such shorter period
as will terminate when all Transfer Restricted Securities covered by such Shelf
Registration Statement have been sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with the Shelf
------------------------------------------------------------------------
Registration Statement. No Holder of Transfer Restricted Securities may
----------------------
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes
to the Company in writing, within 20 days after receipt of a request
therefor, the information specified in Item 507 or 508 of Regulation S-K,
as applicable, of the Act for use in connection with any Shelf Registration
Statement or Prospectus or preliminary Prospectus included therein. No
Holder of Transfer Restricted Securities shall be entitled to liquidated
damages pursuant to Section 5 hereof unless and until such Holder shall
have provided all such information. Each selling Holder agrees to promptly
furnish additional information required to be disclosed in order to make
the information previously furnished to the Company by such Holder not
materially misleading.
(c) Black Out Period. During any consecutive 365 day period, the Company may
----------------
suspend the effectiveness of the Shelf Registration Statement on two
occasions for a period of not more than 45 consecutive days if there is a
possible acquisition or business combination or other transaction, business
development or event involving the Company that may require disclosure in
the Shelf Registration Statement and the Board of Directors of the Company
determines in the exercise of its reasonable judgment that such disclosure
is not in the best interests of the Company and its stockholders or
obtaining any financial statements relating to an acquisition or business
combination required to be included in the Shelf Registration Statement
would be impracticable. In such a case, the Company shall promptly notify
the Holders of the suspension of the Shelf Registration Statements
effectiveness, provided that such notice shall not require the Company to
disclose the possible acquisition or business combination or other
transaction, business development or event if the Board of Directors of the
Company determines in good faith that such acquisition or business
combination or other transaction, business development or even should
remain confidential. Upon the abandonment, consummation, or termination of
the possible acquisition or business combination or other transaction,
business development or event, or the availability of the required
financial statements with respect to a possible acquisition or business
combination, the suspension of the use of the Shelf Registration Statement
pursuant to this Section 4(c) shall cease and the Company shall promptly
comply with Section 6(c)(ii) hereof and notify the Holders that disposition
of Registrable Securities may be resumed.
SECTION 4. LIQUIDATED DAMAGES.
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline, (ii) any such
Registration Statement has not been declared effective by the Commission on or
prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not
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<PAGE>
been Consummated on or prior to the Consummation Deadline or (iv) any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded immediately by a post-effective
amendment to such Registration Statement that cures such failure and that is
itself declared effective immediately (each such event referred to in clauses
(i) through (iv), a "REGISTRATION DEFAULT"), then the Company and the Guarantors
hereby jointly and severally agree to pay to each Holder of Transfer Restricted
Securities affected thereby liquidated damages in an amount equal to $.05 per
week per $1,000 in principal amount of Transfer Restricted Securities held by
such Holder for each week or portion thereof that the Registration Default
continues for the first 90-day period immediately following the occurrence of
such Registration Default. The amount of the liquidated damages shall increase
by an additional $.05 per week per $1,000 in principal amount of Transfer
Restricted Securities with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of liquidated
damages of $.50 per week per $1,000 in principal amount of Transfer Restricted
Securities; provided that the Company and the Guarantors shall in no event be
required to pay liquidated damages for more than one Registration Default at any
given time. Notwithstanding anything to the contrary set forth herein, (1) upon
filing of the Exchange Offer Registration Statement and the Shelf Registration
Statement, in the case of (i) above, (2) upon the effectiveness of the Exchange
Offer Registration Statement and the Shelf Registration Statement, in the case
of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii)
above, or (4) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the Exchange Offer
Registration Statement and the Shelf Registration Statement to again be declared
effective or made usable in the case of (iv) above, the liquidated damages
payable with respect to the Transfer Restricted Securities as a result of such
clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which liquidated
damages are due cease to be Transfer Restricted Securities, all obligations of
the Company and the Guarantors to pay liquidated damages with respect to such
Transfer Restricted Securities shall survive until such time as such obligations
with respect to such Transfer Restricted Securities shall have been satisfied in
full.
SECTION 5. REGISTRATION PROCEDURES.
(a) Exchange Offer Registration Statement. In connection with the Exchange
-------------------------------------
Offer, the Company and the Guarantors shall (x) comply with all applicable
provisions of Section 6(c) below, (y) use their respective best efforts to
effect such exchange and to permit the resale of Series B Notes by Broker-
Dealers that tendered in the Exchange Offer Series A Notes that such
Broker-Dealer acquired for its own account as a result of its market making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any of its Affiliates) being sold in
accordance with the intended method or methods of distribution thereof,
and (z) comply with all of the following provisions:
(i) If, following the date hereof there has been announced a change in
Commission policy with respect to exchange offers such as the Exchange
Offer, that in the reasonable opinion of counsel to the Company raises a
substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Company and the Guarantors hereby agree to seek
a no-action letter or other favorable decision from the Commission allowing
the Company and the Guarantors to Consummate an Exchange Offer for such
Transfer Restricted Securities. The Company and the Guarantors hereby
agree to pursue the issuance of such a decision to the Commission staff
level. In connection with the foregoing, the Company and the Guarantors
hereby agree to take all such other actions as may be requested by the
Commission or otherwise required in connection with the
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<PAGE>
issuance of such decision, including without limitation (A) participating
in telephonic conferences with the Commission, (B) delivering to the
Commission staff an analysis prepared by counsel to the Company setting
forth the legal bases, if any, upon which such counsel has concluded that
such an Exchange Offer should be permitted and (C) diligently pursuing a
resolution (which need not be favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange Offer, each
Holder of Transfer Restricted Securities (including, without limitation,
any Holder who is a Broker Dealer) shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company and the Guarantors (which may be contained in
the letter of transmittal contemplated by the Exchange Offer Registration
Statement) to the effect that (A) it is not an Affiliate of the Company,
(B) it is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution of the Series B Notes to be issued in the Exchange Offer and
(C) it is acquiring the Series B Notes in its ordinary course of business.
As a condition to its participation in the Exchange Offer each Holder using
the Exchange Offer to participate in a distribution of the Series B Notes
shall acknowledge and agree that, if the resales are of Series B Notes
obtained by such Holder in exchange for Series A Notes acquired directly
from the Company or an Affiliate thereof, it (1) could not, under
Commission policy as in effect on the date of this Agreement, rely on the
position of the Commission enunciated in Morgan Stanley and Co., Inc.
----------------------------
(available June 5, 1991) and Exxon Capital Holdings Corporation (available
----------------------------------
May 13, 1988), as interpreted in the Commission's letter to Shearman &
----------
Sterling dated July 2, 1993, and similar no-action letters (including, if
--------
applicable, any no-action letter obtained pursuant to clause (i) above),
and (2) must comply with the registration and prospectus delivery
requirements of the Act in connection with a secondary resale transaction
and that such a secondary resale transaction must be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the Guarantors
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available May
----------------------------------
13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) as
----------------------------
interpreted in the Commission's letter to Shearman & Sterling dated July 2,
-------------------
1993, and, if applicable, any no-action letter obtained pursuant to clause
(i) above, (B) including a representation that neither the Company nor any
Guarantor has entered into any arrangement or understanding with any Person
to distribute the Series B Notes to be received in the Exchange Offer and
that, to the best of the Company's and each Guarantor's information and
belief, each Holder participating in the Exchange Offer is acquiring the
Series B Notes in its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of the
Series B Notes received in the Exchange Offer and (C) any other undertaking
or representation required by the Commission as set forth in any no-action
letter obtained pursuant to clause (i) above, if applicable.
(b) Shelf Registration Statement. In connection with the Shelf Registration
----------------------------
Statement, the Company and the Guarantors shall:
(i) comply with all the provisions of Section 6(c) below and use their
respective best efforts to effect such registration to permit the sale of
the Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 4(b) hereof), and
pursuant thereto the Company and the Guarantors will prepare and file with
the Commission a Registration Statement relating to the registration
-7-
<PAGE>
on any appropriate form under the Act, which form shall be available for
the sale of the Transfer Restricted Securities in accordance with the
intended method or methods of distribution thereof within the time periods
and otherwise in accordance with the provisions hereof, and
(ii) issue, upon the request of any Holder or purchaser of Notes covered
by any Shelf Registration Statement contemplated by this Agreement, Series
B Notes having an aggregate principal amount equal to the aggregate
principal amount of Notes sold pursuant to the Shelf Registration Statement
and surrendered to the Company for cancellation; the Company shall register
Series B Notes on the Shelf Registration Statement for this purpose and
issue the Series B Notes to the purchasers of securities subject to the
Shelf Registration Statement in the names as such purchasers shall
designate.
(c) General Provisions. In connection with any Registration Statement and any
------------------
related Prospectus required by this Agreement, the Company and the
Guarantors shall:
(i) use their respective best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this Agreement, as
applicable. Upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain
an untrue statement of material fact or omit to state any material fact
necessary to make the statements therein not misleading or (B) not to be
effective and usable for resale of Transfer Restricted Securities during
the period required by this Agreement, the Company and the Guarantors shall
file promptly an appropriate amendment to such Registration Statement
curing such defect, and, if Commission review is required, use their
respective best efforts to cause such amendment to be declared effective as
soon as practicable.
(ii) prepare and file with the Commission such amendments and post-
effective amendments to the applicable Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, as the case may be; cause the
Prospectus to be supplemented by any required Prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with Rules 424, 430A and 462, as applicable, under the Act in
a timely manner; and comply with the provisions of the Act with respect to
the disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) advise each Holder and each Initial Purchaser who is required to
deliver a prospectus in connection with sales or market making activities
promptly and, if requested by such Holder, confirm such advice in writing,
(A) when the Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to any applicable Registration
Statement or any post-effective amendment thereto, when the same has become
effective, (B) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or
for additional information relating thereto, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the initiation of
any proceeding for any of the preceding purposes, (D) of the existence of
any fact or the happening of any event that makes any statement of a
material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes
in the Registration Statement in order to
-8-
<PAGE>
make the statements therein not misleading, or that requires the making of
any additions to or changes in the Prospectus in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. If at any time the Commission shall issue any stop
order suspending the effectiveness of the Registration Statement, or any
state securities commission or other regulatory authority shall issue an
order suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky laws, the
Company and the Guarantors shall use their respective best efforts to
obtain the withdrawal or lifting of such order at the earliest possible
time;
(iv) subject to Section 6(c)(i), if any fact or event contemplated by
Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(v) furnish to each Holder in connection with such exchange or sale, if
any, before filing with the Commission, copies of any Registration
Statement or any Prospectus included therein or any amendments or
supplements to any such Registration Statement or Prospectus (including all
documents incorporated by reference after the initial filing of such
Registration Statement), which documents will be subject to the review and
comment of such Holders in connection with such sale, if any, for a period
of at least five Business Days, and the Company will not file any such
Registration Statement or Prospectus or any amendment or supplement to any
such Registration Statement or Prospectus (including all such documents
incorporated by reference) to which such Holders shall reasonably object
within five Business Days after the receipt thereof. A Holder shall be
deemed to have reasonably objected to such filing if such Registration
Statement, amendment, Prospectus or supplement, as applicable, as proposed
to be filed, contains an untrue statement of a material fact or omits to
state any material fact necessary to make the statements therein not
misleading or fails to comply with the applicable requirements of the Act;
(vi) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to each in connection with such exchange or
sale, if any, make the Company's and the Guarantors' representatives
available for discussion of such document and other customary due diligence
matters, and include such information in such document prior to the filing
thereof as such Holders may reasonably request;
(vii) make available, at reasonable times, for inspection by each Holder
and any attorney or accountant retained by such Holders, all financial and
other records, pertinent corporate documents of the Company and the
Guarantors and cause the Company's and the Guarantors' officers, directors
and employees to supply all information reasonably requested by any such
Holder, attorney or accountant in connection with such Registration
Statement or any post-effective amendment thereto subsequent to the filing
thereof and prior to its effectiveness;
(viii) if requested by any Holders in connection with such exchange or,
promptly include in any Registration Statement or Prospectus, pursuant to a
supplement or post-effective amendment if necessary, such information as
such Holders may reasonably request to have included therein, including,
without limitation, information relating to the "Plan of Distribution" of
the Transfer Restricted Securities; and make all required filings of such
Prospectus supplement or post-effective
-9-
<PAGE>
amendment as soon as practicable after the Company is notified of the
matters to be included in such Prospectus supplement or post-effective
amendment;
(ix) furnish to each Holder in connection with such exchange or sale,
without charge, at least one copy of the Registration Statement, as first
filed with the Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(x) deliver to each Holder without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Company and
the Guarantors hereby consent to the use (in accordance with law) of the
Prospectus and any amendment or supplement thereto by each selling Holder
in connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement
thereto;
(xi) upon the request of any Holder, enter into such agreements
(including underwriting agreements) and make such representations and
warranties and take all such other actions in connection therewith in order
to expedite or facilitate the disposition of the Transfer Restricted
Securities pursuant to any applicable Registration Statement contemplated
by this Agreement as may be reasonably requested by any Holder in
connection with any sale or resale pursuant to any applicable Registration
Statement. In such connection, the Company and the Guarantors shall:
(A) upon request of any Holder, furnish (or in the case of paragraphs
(2) and (3), use its best efforts to cause to be furnished) to each Holder,
upon Consummation of the Exchange Offer or upon the effectiveness of the
Shelf Registration Statement, as the case may be:
(1) a certificate, dated such date, signed on behalf of the
Company and each Guarantor by (x) the President or any Vice President
and (y) a principal financial or accounting officer of the Company and
such Guarantor, confirming, as of the date thereof, the matters set
forth in Sections 8(a), 8(b), 8(c) and 8(d) of the Purchase Agreement
and such other similar matters as such Holders may reasonably request;
(2) an opinion (which may be rendered by the general counsel of
the Company, except in the case of an underwritten offering), dated the
date of Consummation of the Exchange Offer or the date of effectiveness
of the Shelf Registration Statement, as the case may be, of counsel for
the Company and the Guarantors covering matters similar to those set
forth in Sections 8(f), 8(g) and 8(h) of the Purchase Agreement and such
other matter as such Holder may reasonably request, and in any event
including a statement to the effect that such counsel has participated
in conferences with officers and other representatives of the Company
and the Guarantors, representatives of the independent public
accountants for the Company and the Guarantors and have considered the
matters required to be stated therein and the statements contained
therein, although such counsel has not independently verified the
accuracy, completeness or fairness of such statements; and that such
counsel advises that, on the basis of the foregoing (relying as to
materiality to the extent such counsel deems appropriate upon the
statements of officers and other representatives of the Company and the
Guarantors and without independent check or verification), no facts came
to such counsel's attention that caused such counsel to believe that the
applicable Registration Statement, at the time such Registration
Statement or any post-effective amendment thereto became effective and,
in the case of the Exchange Offer Registration Statement, as of the date
of Consummation of the Exchange Offer, contained an untrue
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<PAGE>
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus contained in such
Registration Statement as of its date and, in the case of the opinion
dated the date of Consummation of the Exchange Offer, as of the date of
Consummation, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. Without limiting the foregoing, such counsel
may state further that such counsel assumes no responsibility for, and
has not independently verified, the accuracy, completeness or fairness
of the financial statements, notes and schedules and other financial
data included in any Registration Statement contemplated by this
Agreement or the related Prospectus; and
(3) a customary comfort letter, dated the date of Consummation
of the Exchange Offer, or as of the date of effectiveness of the Shelf
Registration Statement, as the case may be, from the Company's
independent accountants, in the customary form and covering matters of
the type customarily covered in comfort letters to underwriters in
connection with underwritten offerings, and affirming the matters set
forth in the comfort letters delivered pursuant to Section 8(h) of the
Purchase Agreement; and
(B) deliver such other documents and certificates as may be reasonably
requested by the selling Holders to evidence compliance with the matters
covered in clause (A) above and with any customary conditions contained in
the agreement entered into by the Company and the Guarantors pursuant to
this clause (xi);
(xii) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders and their counsel in connection with the
registration and qualification of the Transfer Restricted Securities under
the securities or Blue Sky laws of such jurisdictions as the selling
Holders may request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the applicable Registration Statement;
provided, however, that neither the Company nor any Guarantor shall be
required to register or qualify as a foreign corporation where it is not
now so qualified or to take any action that would subject it to the service
of process in suits or to taxation, other than as to matters and
transactions relating to the Registration Statement, in any jurisdiction
where it is not now so subject;
(xiii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Transfer Restricted Securities to
be sold and not bearing any restrictive legends; and to register such
Transfer Restricted Securities in such denominations and such names as the
selling Holders may request at least two Business Days prior to such sale
of Transfer Restricted Securities;
(xiv) use their respective best efforts to cause the disposition of the
Transfer Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Transfer Restricted Securities, subject
to the proviso contained in clause (xii) above;
(xv) provide a CUSIP number for all Transfer Restricted Securities not
later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide
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<PAGE>
the Trustee under the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with the
Depository Trust Company;
(xvi) otherwise use their respective best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
covering a twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of Rule
158 under the Act);
(xvii) cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement required by this
Agreement and, in connection therewith, cooperate with the Trustee and the
Holders to effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA; and
execute and use its best efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all other forms
and documents required to be filed with the Commission to enable such
Indenture to be so qualified in a timely manner; and
(xviii) provide promptly to each Holder, upon request, each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a Transfer
-----------------------
Restricted Security that, upon receipt of the notice referred to in Section
6(c)(iii)(C) or any notice from the Company of the existence of any fact of
the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"SUSPENSION NOTICE"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration
Statement until (i) such Holder has received copies of the supplemented or
amended Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such
Holder is advised in writing by the Company that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental
filings that are incorporated by reference in the Prospectus (in each case,
the "RECOMMENCEMENT DATE"). Each Holder receiving a Suspension Notice
hereby agrees that it will either (i) destroy any Prospectuses, other than
permanent file copies, then in such Holder's possession which have been
replaced by the Company with more recently dated Prospectuses or (ii)
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such Holder's possession of the Prospectus
covering such Transfer Restricted Securities that was current at the time
of receipt of the Suspension Notice. The time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4
hereof, as applicable, shall be extended by a number of days equal to the
number of days in the period from and including the date of delivery of the
Suspension Notice to the date of delivery of the Recommencement Date.
SECTION 6. REGISTRATION EXPENSES.
(a) All expenses incident to the Company's and the Guarantors' performance of
or compliance with this Agreement will be borne by the Company, regardless
of whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses; (ii) all
fees and expenses of compliance with federal securities and state Blue Sky
or securities laws; (iii) all expenses of printing (including printing
certificates for the Series B Notes to be issued in the Exchange Offer and
printing of Prospectuses whether for exchanges, sales, market making or
otherwise), messenger and delivery services and telephone; (iv) all fees
and disbursements of counsel for the Company, the Guarantors and the
Holders of Transfer Restricted Securities; and (v) all fees and
disbursements of independent
-12-
<PAGE>
certified public accountants of the Company and the Guarantors (including
the expenses of any special audit and comfort letters required by or
incident to such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.
(b) In connection with any Registration Statement required by this Agreement
(including, without limitation, the Exchange Offer Registration Statement
and the Shelf Registration Statement), the Company and the Guarantors will
reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities who are tendering Notes into in the Exchange Offer and/or
selling or reselling Notes or Series B Notes pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or the
Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Latham & Watkins,
unless another firm shall be chosen by the Holders of a majority in
principal amount of the Transfer Restricted Securities for whose benefit
such Registration Statement is being prepared.
SECTION 7. INDEMNIFICATION.
(a) The Company and the Guarantors agree, jointly and severally, to indemnify
and hold harmless each Holder, its directors, officers and each Person, if
any, who controls such Holder (within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act), from and against any and all losses,
claims, damages, liabilities, judgments, (including without limitation, any
legal or other expenses incurred in connection with investigating or
defending any matter, including any action that could give rise to any such
losses, claims, damages, liabilities or judgments) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, preliminary prospectus or Prospectus (or any
amendment or supplement thereto) provided by the Company to any Holder or
any prospective purchaser of Series B Notes or registered Notes, or caused
by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such losses, claims, damages, liabilities
or judgments are caused by an untrue statement or omission or alleged
untrue statement or omission that is based upon information relating to any
of the Holders furnished in writing to the Company by any of the Holders.
Notwithstanding the foregoing, the Company and the Guarantors shall not be
liable with respect to any Shelf Registration, to the extent that any such
Loss arises out of, or is based upon, an untrue statement or alleged untrue
statement or omission or alleged omission made in any preliminary
prospectus if (i) the selling Holder of registered Notes failed to send or
deliver a copy of the Prospectus with or prior to the delivery of written
confirmation of the sale of Notes to the person asserting such Loss or who
purchased such Notes which are the subject thereof and (ii) the Prospectus
would have corrected such untrue statement or omission or alleged untrue
statement or alleged omission.
(b) Each Holder of Transfer Restricted Securities agrees, severally and not
jointly, to indemnify and hold harmless the Company and the Guarantors, and
their respective directors and officers, and each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) the Company or the Guarantors to the same extent as the
foregoing indemnity from the Company and the Guarantors set forth in
section (a) above, but only with reference to information relating to such
Holder furnished in writing to the Company by such Holder expressly for use
in any Registration Statement. In no event shall any Holder, its
directors, officers or any Person who controls such Holder be liable or
responsible for any amount in excess of the amount by which the total
amount received by such Holder with respect to its sale of Transfer
Restricted Securities pursuant to a Registration Statement exceeds
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<PAGE>
(i) the amount paid by such Holder for such Transfer Restricted Securities
and (ii) the amount of any damages that such Holder, its directors,
officers or any Person who controls such Holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission.
(c) In case any action shall be commenced involving any person in respect of
which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "INDEMNIFYING
PERSON") in writing and the indemnifying party shall assume the defense of
such action, including the employment of counsel reasonably satisfactory to
the indemnified party and the payment of all fees and expenses of such
counsel, as incurred (except that in the case of any action in respect of
which indemnity may be sought pursuant to both Sections 8(a) and 8(b), a
Holder shall not be required to assume the defense of such action pursuant
to this Section 8(c), but may employ separate counsel and participate in
the defense thereof, but the fees and expenses of such counsel, except as
provided below, shall be at the expense of the Holder). Any indemnified
party shall have the right to employ separate counsel in any such action
and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in
writing by the indemnifying party, (ii) the indemnifying party shall have
failed to assume the defense of such action or employ counsel reasonably
satisfactory to the indemnified party or (iii) the named parties to any
such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available
to the indemnifying party (in which case the indemnifying party shall not
have the right to assume the defense of such action on behalf of the
indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed
as they are incurred. Such firm shall be designated in writing by a
majority of the Holders, in the case of the parties indemnified pursuant to
Section 8(a), and by the Company and Guarantors, in the case of parties
indemnified pursuant to Section 8(b). The indemnifying party shall
indemnify and hold harmless the indemnified party from and against any and
all losses, claims, damages, liabilities and judgments by reason of any
settlement of any action (i) effected with its written consent or (ii)
effected without its written consent if the settlement is entered into more
than twenty business days after the indemnifying party shall have received
a request from the indemnified party for reimbursement for the fees and
expenses of counsel (in any case where such fees and expenses are at the
expense of the indemnifying party) and, prior to the date of such
settlement, the indemnifying party shall have failed to comply with such
reimbursement request. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement or
compromise of, or consent to the entry of judgment with respect to, any
pending or threatened action in respect of which the indemnified party is
or could have been a party and indemnity or contribution may be or could
have been sought hereunder by the indemnified party, unless such
settlement, compromise or judgment (i) includes an unconditional release of
the indemnified party from all liability on claims that are or could have
been the subject matter of such action and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act,
by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this Section 8 is
unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or judgments (i) in
such proportion as is appropriate to reflect the relative benefits received
by the Company and the Guarantors, on the one hand, and the Holders, on the
other hand, from their sale of Transfer
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<PAGE>
Restricted Securities or (ii) if the allocation provided by clause 8(d)(i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause 8(d)(i) above but also the
relative fault of the Company and the Guarantors, on the one hand, and of the
Holder, on the other hand, in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or judgments, as well as
any other relevant equitable considerations. The relative fault of the Company
and the Guarantors, on the one hand, and of the Holder, on the other hand, shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or such
Guarantor, on the one hand, or by the Holder, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and judgments
referred to above shall be deemed to include, subject to the limitations set
forth in the second paragraph of Section 8(a), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
The Company, the Guarantors and each Holder agree that it would not be just
and equitable if contribution pursuant to this Section 8(d) were determined by
pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any matter, including any
action that could have given rise to such losses, claims, damages, liabilities
or judgments. Notwithstanding the provisions of this Section 8, no Holder, its
directors, its officers or any Person, if any, who controls such Holder shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total received by such Holder with respect to the sale of Transfer
Restricted Securities pursuant to a Registration Statement exceeds (i) the
amount paid by such Holder for such Transfer Restricted Securities and (ii) the
amount of any damages which such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 8(c) are several in
proportion to the respective principal amount of Transfer Restricted Securities
held by each Holder hereunder and not joint.
SECTION 8. RULE 144A AND RULE 144.
The Company and each Guarantor agree with each Holder, for so long as any
Transfer Restricted Securities remain outstanding and during any period in which
the Company or such Guarantor (i) is not subject to Section 13 or 15(d) of the
Exchange Act, to make available, upon request of any Holder, to such Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of
the Exchange Act, to make all filings required thereby in a timely manner in
order to permit resales of such Transfer Restricted Securities pursuant to
Rule 144.
SECTION 9. MISCELLANEOUS.
(a) Remedies. The Company and the Guarantors acknowledge and agree that any
--------
failure by the Company or the Guarantors to comply with their respective
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<PAGE>
obligations under Sections 3 and 4 hereof may result in material
irreparable injury to the Initial Purchasers or the Holders for which there
is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchasers or any Holder may obtain such relief as may
be required to specifically enforce the Company's and the Guarantors'
obligations under Sections 3 and 4 hereof. The Company and the Guarantors
further agree to waive the defense in any action for specific performance
that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any Guarantor will, on
--------------------------
or after the date of this Agreement, enter into any agreement with respect
to its securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions
hereof. Except for the Warrant Registration Rights Agreement, neither the
Company nor any Guarantor has previously entered into any agreement
granting any registration rights with respect to its securities to any
Person. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the
holders of the Company's and the Guarantors' securities under any agreement
in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
----------------------
amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless (i) in the case of
Section 5 hereof and this Section 10(c)(i), the Company has obtained the
written consent of Holders of all outstanding Transfer Restricted
Securities and (ii) in the case of all other provisions hereof, the Company
has obtained the written consent of Holders of a majority of the
outstanding principal amount of Transfer Restricted Securities (excluding
Transfer Restricted Securities held by the Company or its Affiliates).
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of Holders whose
Transfer Restricted Securities are being tendered pursuant to the Exchange
Offer, and that does not affect directly or indirectly the rights of other
Holders whose Transfer Restricted Securities are not being tendered
pursuant to such Exchange Offer, may be given by the Holders of a majority
of the outstanding principal amount of Transfer Restricted Securities
subject to such Exchange Offer.
(d) Third Party Beneficiary. The Holders shall be third party beneficiaries to
-----------------------
the agreements made hereunder between the Company and the Guarantors, on
the one hand, and the Initial Purchasers, on the other hand, and shall have
the right to enforce such agreements directly to the extent they may deem
such enforcement necessary or advisable to protect its rights or the rights
of Holders hereunder.
(e) Notices. All notices and other communications provided for or permitted
-------
hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or
air courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company or the Guarantors:
American Mobile Satellite Corporation
10802 Parkridge Boulevard
Reston, Virginia 20191
Telecopy No.: (703) 758-6134
Attention: General Counsel
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<PAGE>
With a copy to:
Arnold & Porter
555 12th Street, N.W.
Washington D.C. 20004
Telecopy No.: (202) 942-5999
Attention: Richard Baltz, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of and
----------------------
be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express
assignment, subsequent Holders; provided, that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Transfer
Restricted Securities in violation of the terms hereof or of the Purchase
Agreement or the Indenture. If any transferee of any Holder shall acquire
Transfer Restricted Securities in any manner, whether by operation of law
or otherwise, such Transfer Restricted Securities shall be held subject to
all of the terms of this Agreement, and by taking and holding such Transfer
Restricted Securities such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of
this Agreement, including the restrictions on resale set forth in this
Agreement and, if applicable, the Purchase Agreement, and such Person shall
be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of counterparts
------------
and by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of reference
--------
only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a final
----------------
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or
referred to herein with respect to the registration rights granted with
respect to the Transfer Restricted Securities. This Agreement supersedes
all prior agreements and understandings between the parties with respect to
such subject matter.
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<PAGE>
[Signature page(s) follow]
-18-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
AMSC ACQUISITION COMPANY, INC.
By:
--------------------------------
Name:
Title:
AMERICAN MOBILE SATELLITE CORPORATION
By:
--------------------------------
Name:
Title:
AMERICAN MOBILE SATELLITE SALES CORPORATION
By:
--------------------------------
Name:
Title:
AMSC SALES CORPORATION LTD.
By:
--------------------------------
Name:
Title:
AMSC SUBSIDIARY CORPORATION
By:
--------------------------------
Name:
Title:
ARDIS COMPANY
By:
--------------------------------
Name:
Title:
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<PAGE>
MOTOROLA ARDIS, INC.
By:
--------------------------------
Name:
Title:
MOTOROLA ARDIS ACQUISITION, INC.
By:
--------------------------------
Name:
Title:
ARDIS HOLDING COMPANY
By:
--------------------------------
Name:
Title:
RADIO DATA NETWORK HOLDING CORPORATION
By:
--------------------------------
Name:
Title:
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<PAGE>
BEAR STEARNS & CO. INC.
By:
--------------------------------
Name:
Title:
J.P. MORGAN SECURITIES INC.
By:
--------------------------------
Name:
Title:
TD SECURITIES (USA) INC.
By:
--------------------------------
Name:
Title:
BancAmerica Robertson Stephens
By:
--------------------------------
Name:
Title:
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<PAGE>
Exhibit 4.4
================================================================================
WARRANT AGREEMENT
-------------------------------------
AMERICAN MOBILE SATELLITE CORPORATION
as Issuer
and
STATE STREET BANK AND TRUST COMPANY
as Warrant Agent
-------------------------------------
March 31, 1998
-------------------------------------
================================================================================
<PAGE>
WARRANT AGREEMENT dated as of March 31, 1998 between American Mobile
Satellite Corporation, ("HOLDINGS"), and State Street Bank and Trust Company, as
Warrant Agent (the "WARRANT AGENT").
WHEREAS, Holdings proposes to issue common stock purchase warrants, as
hereinafter described (the "WARRANTS"), to purchase up to an aggregate of
1,258,759 shares of Common Stock, par value $.01 per share (the "COMMON STOCK"),
of Holdings (the Common Stock issuable on exercise of the Warrants being
referred to herein as the "WARRANT SHARES"), in connection with a private
placement of an aggregate of $335,000,000 principal amount of the 12 1/4% Senior
Notes due 2008 (the "NOTES") of AMSC Acquisition Company, Inc., a wholly-owned
subsidiary of Holdings (the "COMPANY") and 335,000 Warrants, each Warrant
entitling the holder thereof to purchase one Warrant Share. The Notes and
Warrants will be sold in Units, each Unit consisting of $1,000 in aggregate
principal amount of Notes and One Warrant.
WHEREAS, Holdings desires the Warrant Agent to act on behalf of
Holdings, and the Warrant Agent is willing so to act, in connection with the
issuance of Warrant Certificates (as defined below) and other matters as
provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. Definitions.
-----------
"144A GLOBAL WARRANT" means a Global Warrant in the form of Exhibit A1
hereto bearing the Global Warrant Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
number of the Warrants sold in reliance on Rule 144A.
"AFFILIATE" of any specified Person means (A) any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person and (B) any director, officer or
employee of such specified person. For purposes of this definition "CONTROL"
(including, with correlative meanings, the terms "CONTROLLING," "CONTROLLED BY"
and "UNDER COMMON CONTROL WITH") as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.
"APPLICABLE PROCEDURES" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Warrant, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"CEDEL" means Cedel Bank, SA.
"DEFINITIVE WARRANT" means a certificated Warrant registered in the
name of the Holder thereof and issued in accordance with Section 3.6 hereof, in
the form of Exhibit A1 hereto except that such Warrant shall not bear the Global
Warrant Legend and shall not have the "Schedule of Exchanges of Interests in the
Global Warrant" attached thereto.
"DEPOSITARY" means, with respect to the Warrants issuable or issued in
whole or in part in global form, the Person specified in Section 3.3 hereof as
the Depositary with respect to the Warrants,
2
<PAGE>
and any and all successors thereto appointed as Depositary hereunder and having
become such pursuant to the applicable provision of this Indenture.
"DISINTERESTED DIRECTOR" means, in connection with any issuance of
securities that give rise to a determination of the Fair Market Value thereof,
each member of the Board of Directors of Holdings who is not an officer,
employee, director or other Affiliate of the party to whom Holdings is proposing
to issue the securities giving rise to such determination.
"EUROCLEAR" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"GLOBAL WARRANTS" means, individually and collectively, each of the
Restricted Global Warrants, in the form of Exhibits A1 and A2 hereto issued in
accordance with Section 3.1 hereof.
"GLOBAL WARRANT LEGEND" means the legend set forth in Section
3.6(f)(ii), which is required to be placed on all Global Warrants issued under
this Warrant Agreement.
"IAI GLOBAL WARRANT" means the Global Warrant in the form of Exhibit
A1 hereto bearing the Global Warrant Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
number of the Warrants sold to Institutional Accredited Investors.
"INDIRECT PARTICIPANT" means a Person who holds a beneficial interest
in a Global Warrant through a Participant.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"NON-U.S. PERSON" means a Person who is not a U.S. Person.
"OFFICER" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of
Holdings by two Officers of Holdings, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of Holdings that meets the requirements of Section
13.04 and 13.05 of the Indenture.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Warrant Agent, that meets the requirements of
Section 13.04 and 13.05 of the Indenture. The counsel may be an employee of or
counsel to Holdings, any Subsidiary of Holdings or the Warrant Agent.
"PARTICIPANT" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
3
<PAGE>
"PRIVATE PLACEMENT LEGEND" means the legend set forth in Section
3.6(f)(i) to be placed on all Warrants issued under this Warrant Agreement
except where otherwise permitted by the provisions of this Warrant Agreement.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"REGULATION S" means Regulation S promulgated under the Securities
Act.
"REGULATION S GLOBAL WARRANT" means a Regulation S Temporary Global
Warrant or Regulation S Permanent Global Warrant, as appropriate.
"REGULATION S PERMANENT GLOBAL WARRANT" means a permanent Global
Warrant in the form of Exhibit A1 hereto bearing the Global Warrant Legend and
the Private Placement Legend and deposited with or on behalf of and registered
in the name of the Depositary or its nominee, issued in a denomination equal to
the number of the Regulation S Temporary Global Warrants upon expiration of the
Restricted Period.
"REGULATION S TEMPORARY GLOBAL WARRANT" means a temporary Global
Warrant in the form of Exhibit A2 hereto bearing the Private Placement Legend
and deposited with or on behalf of and registered in the name of the Depositary
or its nominee, issued in a denomination equal to the outstanding number of
Warrants initially sold in reliance on Rule 903 of Regulation S.
"RESTRICTED DEFINITIVE WARRANT" means a Definitive Warrant bearing the
Private Placement Legend.
"RESTRICTED GLOBAL WARRANT" means a Global Warrant bearing the Private
Placement Legend.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"RULE 903" means Rule 903 promulgated under the Securities Act.
"RULE 904" means Rule 904 promulgated under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"U.S. PERSON" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
Section 2. Appointment of Warrant Agent.
----------------------------
Holdings hereby appoints the Warrant Agent to act as agent for
Holdings in accordance with the instructions set forth hereinafter in this
Agreement, and the Warrant Agent hereby accepts such appointment.
Section 3. Warrants Certificates
---------------------
3.1. Form and Dating.
4
<PAGE>
(a) General.
The Warrants and the Warrant Agent's certificate of authentication
shall be substantially in the form of Exhibits A1 and A2 hereto (the "WARRANT
CERTIFICATES"). The Warrants may have notations, legends or endorsements
required by law, stock exchange rule or usage. Each Warrant shall be dated the
date of its authentication.
The terms and provisions contained in the Warrants shall constitute,
and are hereby expressly made, a part of this Warrant Agreement, Holdings and
the Warrant Agent, by their execution and delivery of this Warrant Agreement,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Warrant conflicts with the express provisions
of this Warrant Agreement, the provisions of this Warrant Agreement shall govern
and be controlling.
(b) Global Warrants.
Warrants issued in global form shall be substantially in the form of
Exhibits A1 or A2 attached hereto (including the Global Warrant Legend thereon
and the "Schedule of Exchanges of Interests in the Global Warrant" attached
thereto). Warrants issued in definitive form shall be substantially in the form
of Exhibit A1 attached hereto (but without the Global Warrant Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Warrant" attached
thereto). Each Global Warrant shall represent such of the outstanding Warrants
as shall be specified therein and each shall provide that it shall represent the
number of outstanding Warrants from time to time endorsed thereon and that the
number of outstanding Warrants represented thereby may from time to time be
reduced or increased, as appropriate, to reflect exchanges and redemptions. Any
endorsement of a Global Warrant to reflect the amount of any increase or
decrease in the number of outstanding Warrants represented thereby shall be made
by the Warrant Agent or the Warrant Custodian, at the direction of the Warrant
Agent, in accordance with instructions given by the Holder thereof as required
by Section 3.6 hereof.
(c) Temporary Global Warrants.
Warrants offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Warrant, which shall
be deposited on behalf of the purchasers of the Warrants represented thereby
with the Warrant Agent, at its New York office, as custodian for the Depositary,
and registered in the name of the Depositary or the nominee of the Depositary
for the accounts of designated agents holding on behalf of Euroclear or Cedel
Bank, duly executed by Holdings and authenticated by the Warrant Agent as
hereinafter provided. The Restricted Period shall be terminated upon the
receipt by the Warrant Agent of (i) a written certificate from the Depositary,
together with copies of certificates from Euroclear and Cedel Bank certifying
that they have received certification of non-U.S. beneficial ownership of 100%
of the aggregate amount of the Regulation S Temporary Global Warrant (except to
the extent of any beneficial owners thereof who acquired an interest therein
during the Restricted Period pursuant to another exemption from registration
under the Securities Act and who will take delivery of a beneficial ownership
interest in a 144A Global Warrant or an IAI Global Warrant bearing a Private
Placement Legend, all as contemplated by Section 3.6(a)(ii) hereof), and (ii) an
Officers' Certificate from Holdings. Following the termination of the
Restricted Period, beneficial interests in the Regulation S Temporary Global
Warrant shall be exchanged for beneficial interests in Regulation S Permanent
Global Warrants pursuant to the Applicable Procedures. Simultaneously with the
authentication of Regulation S Permanent Global Warrants, the Warrant Agent
shall cancel the Regulation S Temporary Global Warrant. The aggregate amount of
the Regulation S
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Temporary Global Warrants and the Regulation S Permanent Global Warrants may
from time to time be increased or decreased by adjustments made on the records
of the Warrant Agent and the Depositary or its nominee, as the case may be, in
connection with transfers of interest as hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in the Regulation S Temporary
Global Warrant and the Regulation S Permanent Global Warrants that are held by
Participants through Euroclear or Cedel Bank.
3.2. Execution and Authentication.
Two Officers shall sign the Warrants for Holdings by manual or
facsimile signature.
If an Officer whose signature is on a Warrant no longer holds that
office at the time a Warrant is authenticated, the Warrant shall nevertheless be
valid.
A Warrant shall not be valid until authenticated by the manual
signature of the Warrant Agent. The signature shall be conclusive evidence that
the Warrant has been authenticated under this Warrant Agreement.
The Warrant Agent shall, upon a written order of Holdings signed by
two Officers (a "WARRANT AUTHENTICATION ORDER"), authenticate Warrants for
original issue up to the number stated in the preamble hereto.
The Warrant Agent may appoint an authenticating agent acceptable to
Holdings to authenticate Warrants. An authenticating agent may authenticate
Warrants whenever the Warrant Agent may do so. Each reference in this Warrant
Agreement to authentication by the Warrant Agent includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with
Holdings or an Affiliate of Holdings.
3.3. Warrant Registrar and Warrant Paying Agent.
Holdings shall maintain an office or agency where Warrants may be
presented for registration of transfer or for exchange ("WARRANT REGISTRAR") and
an office or agency where Warrants may be presented for payment ("WARRANT PAYING
AGENT"). The Warrant Registrar shall keep a register of the Warrants and of
their transfer and exchange. Holdings may appoint one or more co-Warrant
Registrars and one or more additional Warrant Paying Agents. The term "WARRANT
REGISTRAR" includes any co-Warrant Registrar and the term "WARRANT PAYING AGENT"
includes any additional Warrant Paying Agent. Holdings may change any Warrant
Paying Agent or Warrant Registrar without notice to any Holder. Holdings shall
notify the Warrant Agent in writing of the name and address of any Agent not a
party to this Warrant Agreement. If Holdings fails to appoint or maintain
another entity as Warrant Registrar or Warrant Paying Agent, the Warrant Agent
shall act as such. Holdings or any of its Subsidiaries may act as Warrant
Paying Agent or Warrant Registrar.
Holdings initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Warrants.
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Holdings initially appoints the Warrant Agent to act as the Warrant
Registrar and Warrant Paying Agent and to act as Warrant Custodian with respect
to the Global Warrants.
3.4. Holdings shall require each Warrant Paying Agent other than the
Warrant Agent to agree in writing that the Warrant Paying Agent will hold in
trust for the benefit of Holders or the Warrant Agent all money held by the
Warrant Paying Agent for the payment of Liquidated Damages, if any, on the
Warrants, and will notify the Warrant Agent of any default by Holdings in making
any such payment. While any such default continues, the Warrant Agent may
require a Warrant Paying Agent to pay all money held by it to the Warrant Agent.
Holdings at any time may require a Warrant Paying Agent to pay all money held by
it to the Warrant Agent. Upon payment over to the Warrant Agent, the Warrant
Paying Agent (if other than Holdings or a Subsidiary) shall have no further
liability for the money. If Holdings or a Subsidiary acts as Warrant Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Warrant Paying Agent. Upon any bankruptcy
or reorganization proceedings relating to Holdings, the Warrant Agent shall
serve as Warrant Paying Agent for the Warrants.
3.5. Holder Lists.
The Warrant Agent shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders. If the Warrant Agent is not the Warrant Registrar, Holdings shall
furnish to the Warrant Agent at least seven Business Days before each interest
payment date and at such other times as the Warrant Agent may request in
writing, a list in such form and as of such date as the Warrant Agent may
reasonably require of the names and addresses of the Holders of Warrants.
3.6. Transfer and Exchange.
(a) Transfer and Exchange of Global Warrants.
A Global Warrant may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. All Global Warrants will be exchanged by Holdings for Definitive
Warrants if (i) Holdings delivers to the Warrant Agent notice from the
Depositary that it is unwilling or unable to continue to act as Depositary or
that it is no longer a clearing agency registered under the Exchange Act and, in
either case, a successor Depositary is not appointed by Holdings within 120 days
after the date of such notice from the Depositary or (ii) Holdings in its sole
discretion determines that the Global Warrants (in whole but not in part) should
be exchanged for Definitive Warrants and delivers a written notice to such
effect to the Warrant Agent; provided that in no event shall the Regulation S
Temporary Global Warrant be exchanged by Holdings for Definitive Warrants prior
to (x) the expiration of the Restricted Period and (y) the receipt by the
Warrant Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B)
under the Securities Act. Upon the occurrence of either of the preceding events
in (i) or (ii) above, Definitive Warrants shall be issued in such names as the
Depositary shall instruct the Warrant Agent. Global Warrants also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Warrant authenticated and delivered in exchange for, or in
lieu of, a Global Warrant or any portion thereof, pursuant to this Section 3.6
or Section 3.7 or 3.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Warrant. A Global Warrant may not be exchanged for
another Warrant other than as provided in this Section 3.6(a). However,
beneficial
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interests in a Global Warrant may be transferred and exchanged as provided in
Section 3.6(b) or (c) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Warrants.
The transfer and exchange of beneficial interests in the Global
Warrants shall be effected through the Depositary, in accordance with the
provisions of this Warrant Agreement and the Applicable Procedures. Beneficial
interests in the Restricted Global Warrants shall be subject to restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act. Transfers of beneficial interests in the Global Warrants also
shall require compliance with either subparagraph (i) or (ii) below, as
applicable, as well as one or more of the other following subparagraphs, as
applicable:
(i) Transfer of Beneficial Interests in the Same Global Warrant.
Beneficial interests in any Restricted Global Warrant may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Warrant in
accordance with the transfer restrictions set forth in the Private
Placement Legend; provided, however, that prior to the expiration of
the Restricted Period, transfers of beneficial interests in the
Temporary Regulation S Global Warrant may not be made to a U.S. Person
or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Beneficial interests in any Unrestricted Global Warrant
may be transferred to Persons who take delivery thereof in the form of
a beneficial interest in an Unrestricted Global Warrant. No written
orders or instructions shall be required to be delivered to the
Warrant Registrar to effect the transfers described in this Section
3.6(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Warrants. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 3.6(b)(i) above,
the transferor of such beneficial interest must deliver to the Warrant
Registrar either (A) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to credit or cause to
be credited a beneficial interest in another Global Warrant in an
amount equal to the beneficial interest to be transferred or exchanged
and (2) instructions given in accordance with the Applicable
Procedures containing information regarding the Participant account to
be credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
cause to be issued a Definitive Warrant in an amount equal to the
beneficial interest to be transferred or exchanged and (2)
instructions given by the Depositary to the Warrant Registrar
containing information regarding the Person in whose name such
Definitive Warrant shall be registered to effect the transfer or
exchange referred to in (1) above; provided that in no event shall
Definitive Warrants be issued upon the transfer or exchange of
beneficial interests in the Regulation S Temporary Global Warrant
prior to (x) the expiration of the Restricted Period and (y) the
receipt by the Warrant Registrar of any certificates required pursuant
to Rule 903 under the Securities Act. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in
Global Warrants contained in this Warrant Agreement and the Warrants,
or otherwise applicable provisions under the Securities Act, the
Warrant Agent shall adjust the number of the relevant Global
Warrant(s) pursuant to Section 3.6(g) hereof.
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(iii) Transfer of Beneficial Interests to Another Restricted
Global Warrant. A beneficial interest in any Restricted Global
Warrant may be transferred to a Person who takes delivery thereof in
the form of a beneficial interest in another Restricted Global Warrant
if the transfer complies with the requirements of Section 3.6(b)(ii)
above and the Warrant Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Warrant, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Warrant
or the Regulation S Global Warrant, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including
the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Warrant, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications and certificates and Opinion of
Counsel required by item (3) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Warrant for Beneficial Interests in the Unrestricted
Global Warrant. A beneficial interest in any Restricted Global
Warrant may be exchanged by any holder thereof for a beneficial
interest in an Unrestricted Global Warrant or transferred to a Person
who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Warrant if the exchange or transfer complies with
the requirements of Section 3.6(b)(ii) above and:
(A) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Warrant Registration
Rights Agreement;
(B) the Warrant Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Warrant proposes to exchange such
beneficial interest for a beneficial interest in an
Unrestricted Global Warrant, a certificate from such holder
in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Warrant proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a beneficial interest in an
Unrestricted Global Warrant, a certificate from such holder
in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to the
Warrant Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer
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contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (A) or (B)
above at a time when an Unrestricted Global Warrant has not yet been issued,
Holdings shall issue and, upon receipt of a Warrant Authentication Order in
accordance with Section 3.2 hereof, the Warrant Agent shall authenticate one or
more Unrestricted Global Warrants in an number equal to the number of beneficial
interests transferred pursuant to subparagraph (A) or (B) above.
Beneficial interests in an Unrestricted Global Warrant cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Warrant.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Warrants.
(i) Beneficial Interests in Restricted Global Warrants to
Restricted Definitive Warrants. If any holder of a beneficial
interest in a Restricted Global Warrant proposes to exchange such
beneficial interest for a Restricted Definitive Warrant or to transfer
such beneficial interest to a Person who takes delivery thereof in the
form of a Restricted Definitive Warrant, then, upon receipt by the
Warrant Registrar of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Warrant proposes to exchange such beneficial
interest for a Restricted Definitive Warrant, a certificate from
such holder in the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other
than those listed in subparagraphs (B) through (D) above, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable;
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(F) if such beneficial interest is being transferred to
Holdings or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in
item (3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(c) thereof,
the Warrant Agent shall cause the amount of the applicable Global Warrant
to be reduced accordingly pursuant to Section 3.6(g) hereof, and Holdings
shall execute and the Warrant Agent shall authenticate and deliver to the
Person designated in the instructions a Definitive Warrant in the
appropriate amount. Any Definitive Warrant issued in exchange for a
beneficial interest in a Restricted Global Warrant pursuant to this Section
3.6(c) shall be registered in such name or names and in such authorized
amount or amounts as the holder of such beneficial interest shall instruct
the Warrant Registrar through instructions from the Depositary and the
Participant or Indirect Participant. The Warrant Agent shall deliver such
Definitive Warrants to the Persons in whose names such Warrants are so
registered. Any Definitive Warrant issued in exchange for a beneficial
interest in a Restricted Global Warrant pursuant to this Section 3.6(c)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
Notwithstanding Sections 3.6(i)(A) and (C) hereof, a beneficial
interest in the Regulation S Temporary Global Warrant may not be exchanged
for a Definitive Warrant or transferred to a Person who takes delivery
thereof in the form of a Definitive Warrant prior to (x) the expiration of
the Restricted Period and (y) the receipt by the Warrant Registrar of any
certificates required pursuant to Rule 903(c)(3)(ii)(B) under the
Securities Act, except in the case of a transfer pursuant to an exemption
from the registration requirements of the Securities Act other than Rule
903 or Rule 904.
(ii) Beneficial Interests in Restricted Global Warrants to
Unrestricted Definitive Warrants. A holder of a beneficial interest
in a Restricted Global Warrant may exchange such beneficial interest
for an Unrestricted Definitive Warrant or may transfer such beneficial
interest to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Warrant only if:
(A) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Warrant
Registration Rights Agreement;
(B) the Warrant Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Warrant proposes to exchange such
beneficial interest for a Definitive Warrant that does not
bear the Private Placement Legend, a certificate from such
holder in the form of Exhibit C hereto, including the
certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Warrant proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a Definitive Warrant that
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does not bear the Private Placement Legend, a certificate
from such holder in the form of Exhibit B hereto, including
the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to
the Warrant Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Warrants to
Unrestricted Definitive Warrants. If any holder of a beneficial
interest in an Unrestricted Global Warrant proposes to exchange such
beneficial interest for a Definitive Warrant or to transfer such
beneficial interest to a Person who takes delivery thereof in the form
of a Definitive Warrant, then, upon satisfaction of the conditions set
forth in Section 3.6(b)(ii) hereof, the Warrant Agent shall order the
amount of the applicable Global Warrant to be reduced accordingly
pursuant to Section 3.6(g) hereof, and Holdings shall execute and,
upon receipt of a Warrant Authentication Order, the Warrant Agent
shall authenticate and deliver to the Person designated in the
instructions a Definitive Warrant in the appropriate amount. Any
Definitive Warrant issued in exchange for a beneficial interest
pursuant to this Section 3.6(c)(iii) shall be registered in such name
or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Warrant
Registrar through instructions from the Depositary and the Participant
or Indirect Participant. The Warrant Agent shall deliver such
Definitive Warrants to the Persons in whose names such Warrants are so
registered. Any Definitive Warrant issued in exchange for a
beneficial interest pursuant to this Section 3.6(c)(iii) shall not
bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Warrants for Beneficial
Interests.
(i) Restricted Definitive Warrants to Beneficial Interests in
Restricted Global Warrants. If any Holder of a Restricted Definitive
Warrant proposes to exchange such Warrant for a beneficial interest in
a Restricted Global Warrant or to transfer such Restricted Definitive
Warrants to a Person who takes delivery thereof in the form of a
beneficial interest in a Restricted Global Warrant, then, upon receipt
by the Warrant Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Warrant
proposes to exchange such Warrant for a beneficial interest in a
Restricted Global Warrant, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(2)(b) thereof;
(B) if such Restricted Definitive Warrant is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Warrant is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule
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904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(2) thereof;
(D) if such Restricted Definitive Warrant is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(a)
thereof;
(E) if such Restricted Definitive Warrant is being
transferred to an Institutional Accredited Investor in reliance on
an exemption from the registration requirements of the Securities
Act other than those listed in subparagraphs (B) through (D)
above, a certificate to the effect set forth in Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable;
(F) if such Restricted Definitive Warrant is being
transferred to Holdings or any of its Subsidiaries, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Warrant is being
transferred pursuant to an effective registration statement under
the Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(c)
thereof,
the Warrant Agent shall cancel the Restricted Definitive Warrant,
increase or cause to be increased the number of, in the case of clause
(A) above, the appropriate Restricted Global Warrant, in the case of
clause (B) above, the 144A Global Warrant, in the case of clause (c)
above, the Regulation S Global Warrant, and in all other cases, the
IAI Global Warrant.
(ii) Restricted Definitive Warrants to Beneficial Interests in
Unrestricted Global Warrants. A Holder of a Restricted Definitive
Warrant may exchange such Warrant for a beneficial interest in an
Unrestricted Global Warrant or transfer such Restricted Definitive
Warrant to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Warrant only if:
(A) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Warrant
Registration Rights Agreement;
(B) the Warrant Registrar receives the following:
(1) if the Holder of such Definitive Warrants proposes
to exchange such Warrants for a beneficial interest in the
Unrestricted Global Warrant, a certificate from such Holder
in the form of Exhibit C hereto, including the
certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Warrants proposes
to transfer such Warrants to a Person who shall take
delivery thereof in the form of a beneficial interest in the
Unrestricted Global Warrant, a
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certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (B), if the
Warrant Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable to
the Warrant Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 3.6(d)(ii), the Warrant Agent shall cancel the Definitive Warrants
and increase or cause to be increased the number of the Unrestricted Global
Warrant.
(iii) Unrestricted Definitive Warrants to Beneficial Interests
in Unrestricted Global Warrants. A Holder of an Unrestricted Definitive
Warrant may exchange such Warrant for a beneficial interest in an
Unrestricted Global Warrant or transfer such Definitive Warrants to a
Person who takes delivery thereof in the form of a beneficial interest in
an Unrestricted Global Warrant at any time. Upon receipt of a request for
such an exchange or transfer, the Warrant Agent shall cancel the applicable
Unrestricted Definitive Warrant and increase or cause to be increased the
number of one of the Unrestricted Global Warrants.
If any such exchange or transfer from a Definitive Warrant to a
beneficial interest is effected pursuant to subparagraphs (ii)(B) or (iii)
above at a time when an Unrestricted Global Warrant has not yet been
issued, Holdings shall issue and, upon receipt of a Warrant Authentication
Order in accordance with Section 3.2 hereof, the Warrant Agent shall
authenticate one or more Unrestricted Global Warrants in a number equal to
the number of Definitive Warrants so transferred.
(e) Transfer and Exchange of Definitive Warrants for Definitive
Warrants.
Upon request by a Holder of Definitive Warrants and such Holder's
compliance with the provisions of this Section 3.6(e), the Warrant Registrar
shall register the transfer or exchange of Definitive Warrants. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Warrant Registrar the Definitive Warrants duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Warrant Registrar duly executed by such Holder or by his attorney, duly
authorized in writing. In addition, the requesting Holder shall provide any
additional certifications, documents and information, as applicable, required
pursuant to the following provisions of this Section 3.6(e).
(i) Restricted Definitive Warrants to Restricted Definitive
Warrants. Any Restricted Definitive Warrant may be transferred to and
registered in the name of Persons who take delivery thereof in the
form of a Restricted Definitive Warrant if the Warrant Registrar
receives the following:
(A) if the transfer will be made pursuant to Rule 144A under
the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
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(B) if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item
(2) thereof; and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities
Act, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications, certificates
and Opinion of Counsel required by item (3) thereof, if
applicable.
(ii) Restricted Definitive Warrants to Unrestricted Definitive
Warrants. Any Restricted Definitive Warrant may be exchanged by the
Holder thereof for an Unrestricted Definitive Warrant or transferred
to a Person or Persons who take delivery thereof in the form of an
Unrestricted Definitive Warrant if:
(A) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(B) the Warrant Registrar receives the following:
(1) if the Holder of such Restricted Definitive
Warrants proposes to exchange such Warrants for an
Unrestricted Definitive Warrant, a certificate from such
Holder in the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive
Warrants proposes to transfer such Warrants to a Person who
shall take delivery thereof in the form of an Unrestricted
Definitive Warrant, a certificate from such Holder in the
form of Exhibit B hereto, including the certifications in
item (4) thereof;
and, in each such case set forth in this subparagraph (B),
if the Warrant Registrar so requests, an Opinion of Counsel
in form reasonably acceptable to Holdings to the effect that
such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the
Securities Act.
(iii) Unrestricted Definitive Warrants to Unrestricted
Definitive Warrants. A Holder of Unrestricted Definitive Warrants may
transfer such Warrants to a Person who takes delivery thereof in the
form of an Unrestricted Definitive Warrant. Upon receipt of a request
to register such a transfer, the Warrant Registrar shall register the
Unrestricted Definitive Warrants pursuant to the instructions from the
Holder thereof.
(f) Legends.
The following legends shall appear on the face of all Global Warrants
and Definitive Warrants issued under this Warrant Agreement unless specifically
stated otherwise in the applicable provisions of this Warrant Agreement.
(i) Private Placement Legend.
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(A) Except as permitted by subparagraph (B) below, each
Global Warrant and each Definitive Warrant (and all Warrants issued in
exchange therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION
IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
(A) OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY ONLY (1) TO
HOLDINGS, (2) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (3) TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (4) PURSUANT TO OFFERS
AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (5) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT
(AN "IAI") THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE WARRANT AGENT,
AND, IN THE CASE OF ANY TRANSFER TO ANY IAI OF SECURITIES ENTITLING THE
HOLDER TO PURCHASE 10,000 OR FEWER SHARES OF COMMON STOCK, AN OPINION OF
COUNSEL IF HOLDINGS SO REQUESTS OR (6) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT (AND
BASED ON AN OPINION OF COUNSEL IF HOLDINGS SO REQUESTS), SUBJECT IN EACH OF
THE FOREGOING CASES TO APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THAT IT WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF
THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
(B) Notwithstanding the foregoing, any Global Warrant or
Definitive Warrant issued pursuant to subparagraphs (b)(iv), (c)(ii),
(c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section
3.6 (and all Warrants issued in exchange therefor or substitution
thereof) shall not bear the Private Placement Legend.
(ii) Global Warrant Legend. Each Global Warrant shall bear a
legend in substantially the following form:
THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT
OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON
UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY MAKE SUCH
NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 3.7 OF THE WARRANT
AGREEMENT, (II) THIS
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GLOBAL WARRANT MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO
SECTION 3.6(a) OF THE WARRANT AGREEMENT, (III) THIS GLOBAL NOTE MAY BE
DELIVERED TO THE WARRANT AGREEMENT FOR CANCELLATION PURSUANT TO SECTION
3.11 OF THE WARRANT AGENT AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF HOLDINGS.
(iii) Regulation S Temporary Global Warrant Legend. The
Regulation S Temporary Global Warrant shall bear a legend in
substantially the following form:
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL
WARRANT, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR
CERTIFICATED WARRANTS, ARE AS SPECIFIED IN THE WARRANT AGREEMENT. NEITHER
THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL
WARRANT SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
(g) Cancellation and/or Adjustment of Global Warrants.
At such time as all beneficial interests in a particular Global
Warrant have been exchanged for Definitive Warrants or a particular Global
Warrant has been redeemed, repurchased or canceled in whole and not in part,
each such Global Warrant shall be returned to or retained and canceled by the
Warrant Agent in accordance with Section 3.11 hereof. At any time prior to such
cancellation, if any beneficial interest in a Global Warrant is exchanged for or
transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Warrant or for Definitive Warrants, the
amount of Warrants represented by such Global Warrant shall be reduced
accordingly and an endorsement shall be made on such Global Warrant by the
Warrant Agent or by the Depositary at the direction of the Warrant Agent to
reflect such reduction; and if the beneficial interest is being exchanged for or
transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Warrant, such other Global Warrant shall
be increased accordingly and an endorsement shall be made on such Global Warrant
by the Warrant Agent or by the Depositary at the direction of the Warrant Agent
to reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, Holdings
shall execute and the Warrant Agent shall authenticate Global Warrants
and Definitive Warrants upon Holdings' order or at the Warrant
Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Warrant or to a Holder of a Definitive Warrant
for any registration of transfer or exchange, but Holdings may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any
such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 3.10) hereof.
(iii) All Global Warrants and Definitive Warrants issued upon
any registration of transfer or exchange of Global Warrants or
Definitive Warrants shall be the duly authorized, executed and issued
warrants for Common Stock of Holdings, not
17
<PAGE>
subject to any preemptive rights, and entitled to the same benefits
under this Warrant Agreement, as the Global Warrants or Definitive
Warrants surrendered upon such registration of transfer or exchange.
(iv) Prior to due presentment for the registration of a transfer
of any Warrant, the Warrant Agent, any Agent and Holdings may deem and
treat the Person in whose name any Warrant is registered as the
absolute owner of such Warrant for the purpose of receiving payment of
principal of and interest on such Warrants and for all other purposes,
and none of the Warrant Agent, any Agent or Holdings shall be affected
by notice to the contrary.
(v) The Warrant Agent shall authenticate Global Warrants and
Definitive Warrants in accordance with the provisions of Section 3.2
hereof.
G. All certifications, certificates and Opinions of Counsel required
to be submitted to the Warrant Registrar pursuant to this Section 3.6 to effect
a registration of transfer or exchange may be submitted by facsimile.
3.8. Replacement Warrants.
If any mutilated Warrant is surrendered to the Warrant Agent or
Holdings and the Warrant Agent receives evidence to its satisfaction of the
destruction, loss or theft of any Warrant, Holdings shall issue and the Warrant
Agent, upon receipt of a Warrant Authentication Order, shall authenticate a
replacement Warrant if the Warrant Agent's requirements are met. If required by
the Warrant Agent or Holdings, an indemnity bond must be supplied by the Holder
that is sufficient in the judgment of the Warrant Agent and Holdings to protect
Holdings, the Warrant Agent, any Agent and any authenticating agent from any
loss that any of them may suffer if a Warrant is replaced. Holdings may charge
for its expenses in replacing a Warrant.
Every replacement Warrant is an additional warrant of Holdings and
shall be entitled to all of the benefits of this Warrant Agreement equally and
proportionately with all other Warrants duly issued hereunder.
3.9. Outstanding Warrants.
The Warrants outstanding at any time are all the Warrants
authenticated by the Warrant Agent except for those canceled by it, those
delivered to it for cancellation, those reductions in the interest in a Global
Warrant effected by the Warrant Agent in accordance with the provisions hereof,
and those described in this Section as not outstanding. Except as set forth in
Section 3.9 hereof, a Warrant does not cease to be outstanding because Holdings
or an Affiliate of Holdings holds the Warrant.
If a Warrant is replaced pursuant to Section 3.7 hereof, it ceases to
be outstanding unless the Warrant Agent receives proof satisfactory to it that
the replaced Warrant is held by a bona fide purchaser.
3.10. Treasury Warrants.
In determining whether the Holders of the required amount of Warrants
have concurred in any direction, waiver or consent, Warrants owned by Holdings,
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with Holdings, shall be
18
<PAGE>
considered as though not outstanding, except that for the purposes of
determining whether the Warrant Agent shall be protected in relying on any such
direction, waiver or consent, only Warrants that the Warrant Agent knows are so
owned shall be so disregarded.
3.11. Temporary Warrants
Until certificates representing Warrants are ready for delivery,
Holdings may prepare and the Warrant Agent, upon receipt of a Warrant
Authentication Order, shall authenticate temporary Warrants. Temporary Warrants
shall be substantially in the form of certificated Warrants but may have
variations that Holdings considers appropriate for temporary Warrants and as
shall be reasonably acceptable to the Warrant Agent. Without unreasonable
delay, Holdings shall prepare and the Warrant Agent shall authenticate
definitive Warrants in exchange for temporary Warrants.
Holders of temporary Warrants shall be entitled to all of the benefits
of this Warrant Agreement.
3.12. Cancellation.
Holdings at any time may deliver Warrants to the Warrant Agent for
cancellation. The Warrant Registrar and Warrant Paying Agent shall forward to
the Warrant Agent any Warrants surrendered to them for registration of transfer,
exchange or payment. The Warrant Agent and no one else shall cancel all
Warrants surrendered for registration of transfer, exchange, payment,
replacement or cancellation and shall destroy canceled Warrants (subject to the
record retention requirement of the Exchange Act). Certification of the
destruction of all canceled Warrants shall be delivered to Holdings. Holdings
may not issue new Warrants to replace Warrants that it has paid or that have
been delivered to the Warrant Agent for cancellation.
3.13. Separation
(a) Notwithstanding the provisions of this Section 3, until Separated
(as defined herein) each Warrant Certificate will be held by the Trustee, as
custodian for the registered holders of each Note or Note in global form, and
will be registered in the name of the registered holder of such Note initially
in the amount specified to the Warrant Agent by Holdings. Such holder may, at
any time, on or after the Separation Date (as defined herein), at its option, by
notice to the Unit Agent, elect to separate and/or separately transfer the Notes
and the Warrants represented by such Note or Notes in global form containing a
Warrant, in whole or in part, for a definitive Warrant Certificate or Warrant
Certificates or a beneficial interest in a Global Warrant evidencing the
underlying Warrants and for a Note or Notes or a beneficial interest in a Global
Note of a like aggregate principal amount at maturity of authorized
denominations (such surrender and exchange being referred to herein as a
"SEPARATION" and the related Warrants being referred to as "SEPARATED");
provided that no delay or failure on the part of the Trustee or the Warrant
Agent to exchange such Warrant Certificate and Note or Notes shall affect the
Separation of the Notes and the Warrants or their separate transferability.
Prior to Separation, record ownership of the Warrants will be evidenced by the
certificates for Units or a Global Unit registered in the names of the holders
of the Unit or Global Unit, which certificates or Global Unit will include a
Warrant substantially in the form set forth in the Unit Agreement, and the right
to receive or exercise Warrants will be transferable only in connection with the
transfer of such Units or a beneficial interest in a Global Unit.
(b) All Units and Global Units containing a Warrant presented for
Separation shall be duly endorsed by the registered holder or holders thereof or
by the duly appointed legal representative
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<PAGE>
thereof or by a duly authorized attorney, and in the case of transfer, which
signature shall be a medallion guaranteed by an institution which is a member of
a Securities Transfer Association recognized signature guarantee program. Upon
notice from the Trustee of a Separation, the Warrant Agent shall, with respect
to Definitive Warrants, deliver (or cause to be delivered) the Warrant
Certificate or Warrant Certificates executed by Holdings and countersigned by
the Warrant Agent in the name of such registered holder or holders or such
transferee or transferees or shall, with respect to Global Warrants, deliver (or
cause to be delivered) a Global Warrant (CUSIP 02755R111) executed by Holdings
and countersigned by the Warrant Agent in the name of the Depositary or its
nominee for such aggregate number of Warrants (or, with respect to a Global
Warrant, increasing the number of Warrants represented thereby in such amount)
as shall equal one Warrant for each $1,000 principal amount at maturity of Notes
so exchanged for Separation, bearing numbers or other distinguishing symbols not
contemporaneously outstanding, to the person or persons entitled thereto. Upon
registration of transfer or exchange of a Warrant Certificate, the Warrant Agent
shall countersign and deliver by certified mail a new Warrant Certificate to the
persons entitled thereto.
(c) No service charge shall be made for registration of transfer or
exchange upon surrender of any Warrant Certificate at the office of the Warrant
Agent maintained for that purpose. Holdings may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration, transfer or exchange of Warrant Certificates.
Section 4. Separation of Warrants; Terms of Warrants; Exercise of
------------------------------------------------------
Warrants.
- ---------
4.1. The Notes and Warrants will not be separately transferable until
the close of business on the earliest to occur of (i) 180 days from the date of
issuance, (ii) such earlier date Bear, Stearns & Co. Inc. may determine, (iii)
the occurrence of a Change of Control (as defined in the Indenture) the
commencement of the Exchange Offer and (v) the effectiveness of the shelf
registration statement relating to the Notes (the earliest of such dates, the
"SEPARATION DATE"), at which time such Warrants shall become separately
transferable. Subject to the terms of this Agreement, each Warrant holder shall
have the right, which may be exercised during the period commencing at the
opening of business on the Separation Date and until 5:00 p.m., New York City
time on April 1, 2008 (the "EXERCISE PERIOD"), to receive from Holdings the
number of fully paid and nonassessable Warrant Shares which the holder may at
the time be entitled to receive on exercise of such Warrants and payment of the
exercise price (the "EXERCISE PRICE") then in effect for such Warrant Shares;
provided that holders shall be able to exercise their Warrants only if a
registration statement relating to the Warrant Shares is then in effect, or the
exercise of such Warrants is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), and such securities
are qualified for sale or exempt from qualification under the applicable
securities laws of the states in which the various holders of the Warrants or
other persons to whom it is proposed that the Warrant Shares be issued on
exercise of the Warrants reside. Each holder may exercise its right, during the
Exercise Period, to receive Warrant Shares on a net basis, such that, without
the exchange of any funds, the holder tenders Notes having an aggregate
principal amount at maturity, plus accrued and unpaid interest, if any thereon,
to the date of exercise equal to the Exercise Price of the Warrants being
exercised by such holder. Each Warrant not exercised prior to 5:00 p.m., New
York City time, on April 1, 2008 (the "EXPIRATION DATE") shall become void and
all rights thereunder and all rights in respect thereof under this agreement
shall cease as of such time. No adjustments as to dividends will be made upon
exercise of the Warrants.
4.2. In order to exercise all or any of the Warrants represented by a
Warrant Certificate, (i) in the case of Definitive Warrants, the holder thereof
must surrender for exercise the Warrant Certificate to Holdings at the office of
the Warrant Agent at its New York corporate trust office
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<PAGE>
set forth in Section 6 hereof, (ii) in the case of a book-entry interest in a
Global Warrant, the exercising Participant whose name appears on a securities
position listing of the Depositary as the holder of such book-entry interest
must comply with the Depositary's procedures relating to the exercise of such
book-entry interest in such Global Warrant and (iii) in the case of both Global
Warrants and Definitive Warrants, the holder thereof or the Participant, as
applicable, must deliver to Holdings at the office of the Warrant Agent the form
of election to purchase on the reverse thereof duly filled in and signed, which
signature shall be a medallion guaranteed by an institution which is a member of
a Securities Transfer Association recognized signature guarantee program, and
upon payment to the Warrant Agent for the account of Holdings of the Exercise
Price, which is set forth in the form of Warrant Certificate as adjusted as
herein provided, for the number of Warrant Shares in respect of which such
Warrants are then exercised. Payment of the aggregate Exercise Price shall be
made (i) in cash, by wire transfer or by certified or official bank check
payable to the order of Holdings or (ii) on a net basis in the manner provided
in Section 4.1 hereof.
4.3. Subject to the provisions of Section 5 hereof, upon compliance
with clause (b) above, Holdings shall deliver or cause to be delivered with all
reasonable dispatch, to or upon the written order of the holder and in such name
or names as the Warrant holder or Participant may designate, a certificate or
certificates for the number of whole Warrant Shares issuable upon the exercise
of such Warrants or other securities or property to which such holder is
entitled hereunder, together with cash as provided in Section 9 hereof; provided
that if any consolidation, merger or lease or sale of assets is proposed to be
effected by Holdings as described in Section 8.13 hereof, or a tender offer or
an exchange offer for shares of Common Stock shall be made, upon such surrender
of Warrants and payment of the Exercise Price as aforesaid, Holdings shall, as
soon as possible, but in any event not later than two business days thereafter,
deliver or cause to be delivered the full number of Warrant Shares issuable upon
the exercise of such Warrants in the manner described in this sentence or other
securities or property to which such holder is entitled hereunder, together with
cash as provided in Section 9 hereof. Such certificate or certificates shall be
deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such Warrant Shares as of
the date of the surrender of such Warrants and payment of the Exercise Price.
4.4. The Warrants shall be exercisable, at the election of the
holders thereof, either in full or from time to time in part. If less than all
the Warrants represented by a Definitive Warrant are exercised, such Definitive
Warrant shall be surrendered and a new Definitive Warrant of the same tenor and
for the number of Warrants which were not exercised shall be executed by
Holdings and delivered to the Warrant Agent and the Warrant Agent shall
countersign the new Definitive Warrant, registered in such name or names as may
be directed in writing by the holder, and shall deliver the new Definitive
Warrant to the Person or Persons entitled to receive the same. The Warrant
Agent shall make such notations on Schedule A to each Global Warrant as are
required to reflect any change in the number of Warrants represented by such
Global Warrant resulting from any exercise in accordance with the terms hereof.
4.5. All Warrant Certificates surrendered upon exercise of Warrants
shall be canceled by the Warrant Agent. Such canceled Warrant Certificates
shall then be disposed of by the Warrant Agent in a manner satisfactory to
Holdings. The Warrant Agent shall account promptly to Holdings with respect to
Warrants exercised and concurrently pay to Holdings all monies received by the
Warrant Agent for the purchase of the Warrant Shares through the exercise of
such Warrants.
4.6. The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder available for inspection by the holders
during normal business hours at its office.
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Holdings shall supply the Warrant Agent from time to time with such numbers of
copies of this Agreement as the Warrant Agent may request.
Section 5. Payment of Taxes.
----------------
Holdings will pay all documentary stamp taxes attributable to the
initial issuance of Warrant Shares upon the exercise of Warrants; provided,
however, that Holdings shall not be required to pay any tax or taxes which may
be payable in respect of any transfer involved in the issue of any Warrant
Certificates or any certificates for Warrant Shares in a name other than that of
the registered holder of a Warrant Certificate surrendered upon the exercise of
a Warrant, and Holdings shall not be required to issue or deliver such Warrant
Certificates unless or until the person or persons requesting the issuance
thereof shall have paid to Holdings the amount of such tax or shall have
established to the satisfaction of Holdings that such tax has been paid.
Section 6. Reservation of Warrant Shares.
-----------------------------
6.1. Holdings will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued Common
Stock or its authorized and issued Common Stock held in its treasury, for the
purpose of enabling it to satisfy any obligation to issue Warrant Shares upon
exercise of Warrants, the maximum number of shares of Common Stock which may
then be deliverable upon the exercise of all outstanding Warrants.
6.2. Holdings or, if appointed, the transfer agent for the Common
Stock (the "TRANSFER AGENT") and every subsequent transfer agent for any shares
of Holdings' capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
Holdings will keep a copy of this Agreement on file with the Transfer Agent and
with every subsequent transfer agent for any shares of Holdings' capital stock
issuable upon the exercise of the rights of purchase represented by the
Warrants. The Warrant Agent is hereby irrevocably authorized to requisition
from time to time from such Transfer Agent the stock certificates required to
honor outstanding Warrants upon exercise thereof in accordance with the terms of
this Agreement. Holdings will supply such Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available any
cash which may be payable as provided in Section 9. Holdings will furnish such
Transfer Agent a copy of all notices of adjustments and certificates related
thereto, transmitted to each Holder pursuant to Section 10 hereof.
6.3. Before taking any action which would cause an adjustment
pursuant to Section 8 hereof to reduce the Exercise Price below the then par
value (if any) of the Warrant Shares, Holdings will take any corporate action
which may, in the opinion of its counsel (which may be counsel employed by
Holdings), be necessary in order that Holdings may validly and legally issue
fully paid and nonassessable Warrant Shares at the Exercise Price as so
adjusted.
6.4. Holdings covenants that all Warrant Shares which may be issued
upon exercise of Warrants will, upon issue, be fully paid, nonassessable, free
of preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issue thereof.
Section 7. Obtaining Stock Exchange Listings.
---------------------------------
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Holdings will from time to time take all action which may be necessary
so that the Warrant Shares, immediately upon their issuance upon the exercise of
Warrants, will be listed on the principal securities exchanges and markets
within the United States of America, if any, on which other shares of Common
Stock are then listed.
Section 8. Adjustment of Exercise Price and Number of Warrant Shares
---------------------------------------------------------
Issuable.
- --------
The Exercise Price and the number of Warrant Shares issuable upon the
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 8. For purposes of this
Section 8 "COMMON STOCK" means shares now or hereafter authorized of any class
of common stock of Holdings and any other stock of Holdings, however designated,
that has the right (subject to any prior rights of any class or series of
preferred stock) to participate in any distribution of the assets or earnings of
Holdings without limit as to per share amount.
8.1. Adjustment for Change in Capital Stock. If Holdings (i) pays a
--------------------------------------
dividend or makes a distribution on its Common Stock in shares of its Common
Stock, (ii) subdivides its outstanding shares of Common Stock into a greater
number of shares, (iii) combines its outstanding shares of Common Stock into a
smaller number of shares, (iv) makes a distribution on its Common Stock in
shares of its capital stock other than Common Stock or (v) issues by
reclassification of its Common Stock any shares of its capital stock; then the
Exercise Price in effect immediately prior to such action shall be
proportionately adjusted so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of Holdings
which he would have owned immediately following such action if such Warrant had
been exercised immediately prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If, after an adjustment, a holder of a Warrant upon exercise of it may receive
shares of two or more classes of capital stock of Holdings, Holdings shall
determine the allocation of the adjusted Exercise Price between the classes of
capital stock. After such allocation, the exercise privilege and the Exercise
Price of each class of capital stock shall thereafter be subject to adjustment
on terms comparable to those applicable to Common Stock in this Section 8. Such
adjustment shall be made successively whenever any event listed above shall
occur.
8.2. Adjustment for Rights Issue. If Holdings distributes any rights,
---------------------------
options or warrants to all holders of its Common Stock entitling them for a
period expiring within 45 days after the record date mentioned below to purchase
shares of Common Stock at a price per share less than the Fair Value (as defined
herein) per share on that record date, the Exercise Price shall be adjusted in
accordance with the formula:
O + N x P
-----
E' = E x M
-----------
O + N
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the record date.
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N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the Fair Value per share of Common Stock on the record date.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, options or warrants. If at the end of the period during which such
rights, options or warrants are exercisable, not all rights, options or warrants
shall have been exercised, the Exercise Price shall be immediately readjusted to
what it would have been if "N" in the above formula had been the number of
shares actually issued.
8.3. Adjustment for Other Distributions. If Holdings distributes to
all holders of its Common Stock any of its assets or debt securities or any
rights or warrants to purchase debt securities, assets or other securities of
Holdings, the Exercise Price shall be adjusted in accordance with the formula:
E' = E x M - F
-----
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the Fair Value per share of Common Stock on the record date mentioned
below.
F = the fair market value on the record date of the assets, securities,
rights or warrants to be distributed in respect of one share of Common
Stock as determined in good faith by the Board of Directors of
Holdings (the "BOARD OF DIRECTORS").
The adjustment shall be made successively whenever any such distribution
is made and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution.
This Section 8.3 does not apply to cash dividends or cash
distributions paid out of consolidated current or retained earnings as shown on
the books of Holdings prepared in accordance with generally accepted accounting
principles. Also, this Section 8.3 does not apply to rights, options or
warrants referred to in Section 8.2 hereof.
8.3.1. Adjustment for Common Stock Issue.
---------------------------------
If Holdings issues shares of Common Stock for a consideration per
share less than the Fair Value per share on the date Holdings fixes the offering
price of such additional shares, the Exercise Price shall be adjusted in
accordance with the formula:
C
-
E' = E x O + M
-------
A
24
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where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the issuance of
such additional shares.
C = the aggregate consideration received for the issuance of such
additional shares.
M = the Fair Value per share on the date of issuance of such additional
shares.
A = the number of shares outstanding immediately after the issuance of
such additional shares.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
This Section 8.4 does not apply to:
(i) any of the transactions described in Sections 8.2 and 8.3
hereof,
(ii) the exercise of Warrants, or the conversion or exchange of
other securities convertible or exchangeable for Common Stock,
(iii) Common Stock issued to Holdings' employees under bona fide
employee benefit plans adopted by the Board of Directors and approved
by the holders of Common Stock when required by law, if such Common
Stock would otherwise be covered by this subsection (d) (but only to
the extent that the aggregate number of shares excluded hereby and
issued after the date of this Warrant Agreement shall not exceed 15%
of the Common Stock outstanding at the time of the adoption of each
such plan, exclusive of antidilution adjustments thereunder),
(iv) Common Stock upon the exercise of rights or warrants issued
to the holders of Common Stock,
(v) Common Stock issued to shareholders of any person which
merges into Holdings in proportion to their stock holdings of such
person immediately prior to such merger, upon such merger, or
(vi) the issuance of shares of Common Stock pursuant to rights,
options or warrants which were originally issued in a Non-Affiliate
Sale (as defined below) together with one or more other securities as
part of a unit at a price per unit.
8.4. Adjustment for Convertible Securities Issue.
-------------------------------------------
If Holdings issues any securities convertible into or
exchangeable for Common Stock (other than securities issued in
transactions described in Sections 8.2 and 8.3
25
<PAGE>
hereof for a consideration per share of Common Stock initially
deliverable upon conversion or exchange of such securities less than
the Fair Value per share on the date of issuance of such securities,
the Exercise Price shall be adjusted in accordance with this formula:
C
-
E' = E x O + M
-----
O + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the issuance of
such securities.
C = the aggregate consideration received for the issuance of such
securities.
M = the Fair Value per share on the date of issuance of such securities.
D = the maximum number of shares deliverable upon conversion or in
exchange for such securities at the initial conversion or exchange
rate.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or exchange of
such securities have not been issued when such securities are no longer
outstanding, then the Exercise Price shall promptly be readjusted to the
Exercise Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion or exchange of such securities.
This Section 8.5 does not apply to convertible securities issued to
shareholders of any person which merges into Holdings, or with a subsidiary of
Holdings, in proportion to their stock holdings of such person immediately prior
to such merger, upon such merger.
8.5. Consideration Received.
----------------------
For purposes of any computation respecting consideration received
pursuant to Sections 8.4 and 8.5 hereof the following shall apply:
(i) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided
that in no case shall any deduction be made for any commissions,
discounts or other expenses incurred Holdings for any underwriting of
the issue or otherwise in connection therewith;
(ii) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall
26
<PAGE>
be deemed to be the fair market value thereof as determined in good
faith by the Board of Directors (irrespective of the accounting
treatment thereof), whose determination shall be conclusive, and
described in a Board resolution which shall be filed with the Warrant
Agent;
(iii) in the case of the issuance of securities convertible into
or exchangeable for shares, the aggregate consideration received
therefor shall be deemed to be the consideration received by Holdings
for the issuance of such securities plus the additional consideration,
if any, to be received by Holdings upon the conversion or exchange
thereof (the consideration in each case to be determined in the same
manner as provided in clauses (1) and (2) of this subsection); and
(iv) in the case of the issuance of shares of Common Stock
pursuant to rights, options or warrants, which rights, options or
warrants were originally issued together with one or more other
securities as part of a unit, the consideration shall be deemed to be
(i) the fair value of such rights, options or warrants at the time of
issuance thereof as determined in good faith by the Board of Directors
whose determination shall be conclusive and described in a Board
resolution which shall be filed with the Warrant Agent plus (ii) the
additional consideration, if any, to be received by Holdings upon the
exercise, conversion or exchange thereof (as determined in the same
manner as provided in clause (1) and (2) of this subsection).
8.6. Fair Market Value. (A) the average over the 20 trading days
-----------------
ending on the date immediately preceding the date of such determination of the
last reported sale price, or, if no such sale takes place on any such day, the
closing bid price, in either case as reported for consolidated transactions on
the principal national securities exchange (including the NASDAQ National
Market) on which such security is listed or admitted for trading; provided,
however, that if any event that results in an adjustment of the Exercise Price
occurs during the period beginning on the first day of such 20-day period and
ending on the date immediately preceding the date of determination, the Fair
Market Value as determined pursuant to the foregoing will be appropriately
adjusted to reflect the occurrence of such event or (B) if such security is not
listed on any exchange or admitted for trading on the NASDAQ Stock Market, the
Fair Market Value shall be (1) in connection with a sale to a party that is not
an Affiliate of Holdings in an arm's length transaction (a "NON-AFFILIATE
SALE"), the price per security at which such security is sold and (2) in
connection with any sale to an Affiliate of Holdings, (a) the last price per
security at which such security was sold in a Non-Affiliate Sale within the
three-month period preceding such date of determination or (b) if clause (a) is
not applicable, the fair market value of such security determined in good faith
by (i) a majority of the Board of Directors of Holdings, including a majority of
the Disinterested Directors, and approved in a board resolution delivered to the
Warrant Agent or (ii) a nationally recognized investment banking, appraisal or
valuation firm, which is not an Affiliate of Holdings, in each case, taking into
account, among other factors deemed relevant by the Board of Directors or such
investment banking, appraisal or valuation firm, the trading price and volume of
such security on any national securities exchange or automated quotation system
on which such security is traded.
8.7. When De Minimis Adjustment May Be Deferred. No adjustment in
------------------------------------------
the Exercise Price need be made unless the adjustment would require an increase
or decrease of at least 1.0% in the Exercise Price. Any adjustments that are
not made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 8 shall be made to the nearest
cent or to the nearest 1/100th of a share, as the case may be.
27
<PAGE>
8.8. When No Adjustment Required. No adjustment need be made for a
---------------------------
transaction referred to Sections 8.1., 8.2, 8.3, 8.4 or 8.5 hereof, if Warrant
holders are to participate in the transaction on a basis and with notice that
the Board of Directors determines to be fair and appropriate in light of the
basis and notice on which holders of Common Stock participate in the
transaction. No adjustment need be made for (i) rights to purchase Common Stock
pursuant to a Holdings plan for reinvestment of dividends or interest, (ii) a
change in the par value or no par value of the Common Stock. To the extent the
Warrants become convertible into cash, no adjustment need be made thereafter as
to the cash. Interest will not accrue on the cash.
8.9. Notice of Adjustment. Whenever the Exercise Price is adjusted,
--------------------
Holdings shall provide the notices required by Section 10 hereof.
8.10. Voluntary Reduction. Holdings from time to time may
-------------------
reduce the Exercise Price by any amount for any period of time, if the period is
at least 20 days and if the reduction is irrevocable during the period; provided
that in no event may the Exercise Price be less than the par value of a share of
Common Stock. Whenever the Exercise Price is reduced, Holdings shall mail to
Warrant holders a notice of the reduction. Holdings shall mail the notice at
least 15 days before the date the reduced Exercise Price takes effect. The
notice shall state the reduced Exercise Price and the period in which it will be
in effect. A reduction of the Exercise Price does not change or adjust the
Exercise Price otherwise in effect for purposes of Sections 8.1, 8.2., 8.3.,8.4
and 8.5 hereof.
8.11. Notice of Certain Transactions. If (i) Holdings takes any
------------------------------
action that would require an adjustment in the Exercise Price pursuant to
Sections 8.1, 8.2., 8.3.,8.4 and 8.5 hereof and if Holdings does not arrange for
Warrant holders to participate pursuant to Section 8.9 hereof, (ii) Holdings
takes any action that would require a supplemental Warrant Agreement pursuant to
Section 8.13 hereof or (iii) there is a liquidation or dissolution of Holdings,
then Holdings shall mail to Warrant holders a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, liquidation or dissolution. Holdings shall mail the notice at least 15
days before such date. Failure to mail the notice or any defect in it shall not
affect the validity of the transaction.
8.12. Reorganization of Holdings. Immediately after the Effective
--------------------------
Time, Holdings consolidates or merges with or into, or transfers or leases all
or substantially all its assets to, any person, upon consummation of such
transaction the Warrants shall automatically become exercisable for the kind and
amount of securities, cash or other assets which the holder of a Warrant would
have owned immediately after the consolidation, merger, transfer or lease if the
holder had exercised the Warrant immediately before the effective date of the
transaction. Concurrently with the consummation of such transaction, the
corporation formed by or surviving any such consolidation or merger if other
than Holdings, or the person to which such sale or conveyance shall have been
made, shall enter into a supplemental Warrant Agreement so providing and further
providing for adjustments which shall be as nearly equivalent as may be
practical to the adjustments provided for in this Section 8.13. The successor
company shall mail to Warrant holders a notice describing the supplemental
Warrant Agreement. If the issuer of securities deliverable upon exercise of
Warrants under the supplemental Warrant Agreement is an affiliate of the formed,
surviving, transferee or lessee corporation, that issuer shall join in the
supplemental Warrant Agreement. If this Section 8.13 applies, Sections 8.1,
8.2., 8.3.,8.4 and 8.5 hereof do not apply.
8.13. Holdings Determination Final. Any determination that Holdings
----------------------------
or the Board of Directors must make pursuant to Section 8.1, 8.2., 8.3., 8.4,
8.5, 8.6, 8.7d or 8.8 hereof is conclusive.
28
<PAGE>
8.14. Warrant Agent's Disclaimer. The Warrant Agent has no duty to
--------------------------
determine when an adjustment under this Section 8 should be made, how it should
be made or what it should be. The Warrant Agent has no duty to determine whether
any provisions of a supplemental Warrant Agreement under Section 8.13 hereof are
correct. The Warrant Agent makes no representation as to the validity or value
of any securities or assets issued upon exercise of Warrants. The Warrant Agent
shall not be responsible for the Holdings' failure to comply with this
Section 8.
8.15. When Issuance or Payment May Be Deferred. In any case in which
----------------------------------------
this Section 8 shall require that an adjustment in the Exercise Price be made
effective as of a record date for a specified event, Holdings may elect to defer
until the occurrence of such event (i) issuing to the holder of any Warrant
exercised after such record date the Warrant Shares and other capital stock of
Holdings, if any, issuable upon such exercise over and above the Warrant Shares
and other capital stock of Holdings, if any, issuable upon such exercise on the
basis of the Exercise Price and (ii) paying to such holder any amount in cash in
lieu of a fractional share pursuant to Section 9 hereof; provided that Holdings
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional Warrant Shares, other
capital stock and cash upon the occurrence of the event requiring such
adjustment.
8.16. Adjustment in Number of Shares. Upon each adjustment of the
------------------------------
Exercise Price pursuant to this Section 8, each Warrant outstanding prior to the
making of the adjustment in the Exercise Price shall thereafter evidence the
right to receive upon payment of the adjusted Exercise Price that number of
shares of Common Stock (calculated to the nearest hundredth) obtained from the
following formula:
N' = N x E
--------
E'
where:
N' = the adjusted number of Warrant Shares issuable upon exercise of a
Warrant by payment of the adjusted Exercise Price.
N = the number or Warrant Shares previously issuable upon exercise of a
Warrant by payment of the Exercise Price prior to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
8.17. Form of Warrants. Irrespective of any adjustments in the
----------------
Exercise Price or the number or kind of shares purchasable upon the exercise of
the Warrants, Warrants theretofore or thereafter issued may continue to express
the same price and number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement.
Section 9. Fractional Interests.
--------------------
Holdings shall not be required to issue fractional Warrant Shares on
the exercise of Warrants. If more than one Warrant shall be presented for
exercise in full at the same time by the same holder, the number of full Warrant
Shares which shall be issuable upon the exercise thereof shall be
29
<PAGE>
computed on the basis of the aggregate number of Warrant Shares purchasable on
exercise of the Warrants so presented. If any fraction of a Warrant Share would,
except for the provisions of this Section 9, be issuable on the exercise of any
Warrants (or specified portion thereof), Holdings shall pay an amount in cash
equal to the Exercise Price on the day immediately preceding the date the
Warrant is presented for exercise, multiplied by such fraction.
Section 10. Notices to Warrant Holders.
--------------------------
Upon any adjustment of the Exercise Price pursuant to Section 8,
Holdings shall promptly thereafter (i) cause to be filed with the Warrant Agent
a certificate of a firm of independent public accountants of recognized standing
selected by the Board of Directors of Holdings (who may be the regular auditors
of Holdings) setting forth the Exercise Price after such adjustment and setting
forth in reasonable detail the method of calculation and the facts upon which
such calculations are based and setting forth the number of Warrant Shares (or
portion thereof) issuable after such adjustment in the Exercise Price, upon
exercise of a Warrant and payment of the adjusted Exercise Price, which
certificate shall be conclusive evidence of the correctness of the matters set
forth therein, and (ii) cause to be given to each of the registered holders of
the Warrant Certificates at his address appearing on the Warrant register
written notice of such adjustments by first-class mail, postage prepaid. Where
appropriate, such notice may be given in advance and included as a part of the
notice required to be mailed under the other provisions of this Section 10.
In case:
(a) Holdings shall authorize the issuance to all holders of shares of
Common Stock of rights, options or warrants to subscribe for or purchase shares
of Common Stock or of any other subscription rights or warrants; or
(b) Holdings shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other than
cash dividends or cash distributions payable out of consolidated earnings or
earned surplus or dividends payable in shares of Common Stock or distributions
referred to in Section 8.1 hereof); or
(c) of any consolidation or merger to which Holdings is a party and
for which approval of any shareholders of Holdings is required, or of the
conveyance or transfer of the properties and assets of Holdings substantially as
an entirety, or of any reclassification or change of Common Stock issuable upon
exercise of the Warrants (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), or a tender offer or exchange offer for shares of Common Stock;
or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of Holdings; or
(e) Holdings proposes to take any action (other than actions of the
character described in Section 8.1 which would require an adjustment of the
Exercise Price pursuant to Section 8, then Holdings shall cause to be filed with
the Warrant Agent and shall cause to be given to each of the registered holders
of the Warrant Certificates at his address appearing on the Warrant register, at
least 20 days (or 10 days in any case specified in clauses (a) or (b) above)
prior to the applicable record date hereinafter specified, or promptly in the
case of events for which there is no record date, by first-class mail, postage
prepaid, a written notice stating (i) the date as of which the holders of record
of shares of
30
<PAGE>
Common Stock to be entitled to receive any such rights, options, warrants or
distribution are to be determined, or (ii) the initial expiration date set forth
in any tender offer or exchange offer for shares of Common Stock, or (iii) the
date on which any such consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up is expected to become effective or consummated, and
the date as of which it is expected that holders of record of shares of Common
Stock shall be entitled to exchange such shares for securities or other
property, if any, deliverable upon such reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up. The failure to
give the notice required by this Section 10 or any defect therein shall not
affect the legality or validity of any distribution, right, option, warrant,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up, or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the right
to vote or to consent or to receive notice as shareholders in respect of the
meetings of shareholders or the election of Directors of Holdings or any other
matter, or any rights whatsoever as shareholders of Holdings.
Section 11. Merger, Consolidation or Change of Name of Warrant Agent.
--------------------------------------------------------
Any corporation into which the Warrant Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Warrant Agent shall be a party, or any corporation succeeding to
the business of the Warrant Agent, shall be the successor to the Warrant Agent
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor warrant agent under the provisions of
Section 14. In case at the time such successor to the Warrant Agent shall
succeed to the agency created by this Agreement, and in case at that time any of
the Warrant Certificates shall have been countersigned but not delivered, any
such successor to the Warrant Agent may adopt the countersignature of the
original Warrant Agent; and in case at that time any of the Warrant Certificates
shall not have been countersigned, any successor to the Warrant Agent may
countersign such Warrant Certificates either in the name of the predecessor
Warrant Agent or in the name of the successor to the Warrant Agent; and in all
such cases such Warrant Certificates shall have the full force and effect
provided in the Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrant Certificates shall have been countersigned but
not delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
Section 12. Warrant Agent.
-------------
The Warrant Agent undertakes the duties and obligations imposed by
this Agreement upon the following terms and conditions, by all of which Holdings
and the holders of Warrants, by their acceptance thereof, shall be bound:
(a) The statements contained herein and in the Warrant Certificates
shall be taken as statements of Holdings and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Warrant Agent or action taken or to be taken by it. The Warrant Agent
31
<PAGE>
assumes no responsibility with respect to the distribution of the Warrant
Certificates except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of
Holdings to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied with by Holdings.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for Holdings) and the Warrant Agent shall
incur no liability or responsibility to Holdings or to any holder of any Warrant
Certificate in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to
Holdings or to any holder of any Warrant Certificate for any action taken in
reliance on any Warrant Certificate, certificate of shares, notice, resolution,
waiver, consent, order, certificate, or other paper, document or instrument
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(e) Holdings agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the execution of
this Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent in the execution of this Agreement and to indemnify the Warrant
Agent and save it harmless against any and all liabilities, including judgments,
costs and counsel fees, for anything done or omitted by the Warrant Agent in the
execution of this Agreement except as a result of its gross negligence or bad
faith.
(f) Holdings shall indemnify the Warrant Agent against any and all
losses, liabilities or expenses incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Warrant
Agreement, including the costs and expenses of enforcing this Warrant Agreement
against Holdings (including this Section 12(f)) and defending itself against any
claim (whether asserted by Holdings or any Holder or any other person) or
liability in connection with the exercise or performance of any of its powers or
duties hereunder, except to the extent any such loss, liability or expense may
be attributable to its negligence or bad faith. The Warrant Agent shall notify
Holdings promptly of any claim for which it may seek indemnity. Failure by the
Warrant Agent to so notify Holdings shall not relieve Holdings of its
obligations hereunder. Holdings shall defend the claim and the Warrant Agent
shall cooperate in the defense. The Warrant Agent may have separate counsel and
Holdings shall pay for reasonable fees and expenses of such counsel. Holdings
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld. All rights of action under this Agreement or
under any of the Warrants may be enforced by the Warrant Agent without the
possession of any of the Warrant Certificates or the production thereof at any
trial or other proceeding relative thereto, and any such action, suit or
proceeding instituted by the Warrant Agent shall be brought in its name as
Warrant Agent and any recovery of judgment shall be for the ratable benefit of
the registered holders of the Warrants, as their respective rights or interests
may appear.
(g) The Warrant Agent, and any stockholder, director, officer or
employee of it, may buy, sell or deal in any of the Warrants or other securities
of Holdings or become pecuniarily interested in any transaction in which
Holdings may be interested, or contract with or lend money to Holdings or
otherwise act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for Holdings or for any other legal entity.
32
<PAGE>
(h) The Warrant Agent shall act hereunder solely as agent for
Holdings, and its duties shall be determined solely by the provisions hereof.
The Warrant Agent shall not be liable for anything which it may do or refrain
from doing in connection with this Agreement except for its own gross negligence
or bad faith.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of any Warrant Certificate to make or cause to be
made any adjustment of the Exercise Price or number of the Warrant Shares or
other securities or property deliverable as provided in this Agreement, or to
determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or with
respect to the method employed in making the same. The Warrant Agent shall not
be accountable with respect to the validity or value or the kind or amount of
any Warrant Shares or of any securities or property which may at any time be
issued or delivered upon the exercise of any Warrant or with respect to whether
any such Warrant Shares or other securities will when issued be validly issued
and fully paid and nonassessable, and makes no representation with respect
thereto.
Section 13. Change of Warrant Agent.
-----------------------
If the Warrant Agent shall become incapable of acting as Warrant
Agent, Holdings shall appoint a successor to such Warrant Agent. If Holdings
shall fail to make such appointment within a period of 30 days after it has been
notified in writing of such incapacity by the Warrant Agent or by the registered
holder of a Warrant Certificate, then the registered holder of any Warrant
Certificate may apply to any court of competent jurisdiction for the appointment
of a successor to the Warrant Agent. Pending appointment of a successor to such
Warrant Agent, either by Holdings or by such a court, the duties of the Warrant
Agent shall be carried out by Holdings. The holders of a majority of the
unexercised Warrants shall be entitled at any time to remove the Warrant Agent
and appoint a successor to such Warrant Agent. Such successor to the Warrant
Agent need not be approved by Holdings or the former Warrant Agent. After
appointment the successor to the Warrant Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Warrant Agent without further act or deed; but the former Warrant Agent shall
deliver and transfer to the successor to the Warrant Agent any property at the
time held by it hereunder and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Failure to give any notice
provided for in this Section 13, however, or any defect therein, shall not
affect the legality or validity of the appointment of a successor to the Warrant
Agent.
Section 14. Registration.
------------
Holders shall be able to exercise their Warrants only if a
registration statement relating to the Warrant Shares is then in effect, or the
exercise of such Warrants is exempt from the registration requirements of the
Securities Act, and such securities are qualified for sale or exempt from
qualification under the applicable securities laws of the states in which the
various holders of the Warrants or other persons to whom it is proposed that the
Warrant Shares be issued on exercise of the Warrants reside.
Section 15. Reports.
-------
(a) Whether or not required by the rules and regulations of the
Securities and Exchange Commission (the "COMMISSION "), so long as any Warrants
are outstanding, Holdings shall furnish to the Warrant Agent and the holders of
Warrants (i) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and
33
<PAGE>
10-K if Holdings were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by Holdings'
certified independent accountants and (ii) all current reports that would be
required to be filed with the Commission on Form 8-K if Holdings were required
to file such reports. In addition, whether or not required by the rules and
regulations of the Commission, Holdings shall file a copy of all such
information and reports with the Commission for public availability (unless the
Commission shall not accept such a filing) and make such information available
to securities analysts and prospective investors upon request.
(b) Holdings shall provide the Warrant Agent with a sufficient number
of copies of all such reports that the Warrant Agent may be required to deliver
to the holders of the Warrants under this Section 15.
Section 16. Notices to Holdings and Warrant Agent.
-------------------------------------
Any notice or demand authorized by this Agreement to be given or made
by the Warrant Agent or by the registered holder of any Warrant Certificate to
or on Holdings shall be sufficiently given or made when and if deposited in the
mail, first class or registered, postage prepaid, addressed (until another
address is filed in writing by Holdings with the Warrant Agent), as follows:
American Mobile Satellite Corporation
10802 Parkridge Boulevard
Reston, Virginia 20191
Attention: Randy S. Segal, Esq.
In case Holdings shall fail to maintain such office or agency or shall
fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
principal office of the Warrant Agent.
Any notice pursuant to this Agreement to be given by Holdings or by
the registered holder(s) of any Warrant Certificate to the Warrant Agent shall
be sufficiently given when and if deposited in the mail, first-class or
registered, postage prepaid, addressed (until another address is filed in
writing by the Warrant Agent with Holdings) to the Warrant Agent as follows:
State Street Bank and Trust Company
Goodwin Square
225 Asylum Street
Hartford, Connecticut 06103
Attention: Steven Cimalore
Section 17. Supplements and Amendments.
--------------------------
From time to time, Holdings and the Warrant Agent, without consent of
the holders of the Warrants, may amend or supplement the Warrant Agreement for
certain purposes, including curing defects or inconsistencies or making changes
that do not materially adversely affect the rights of any holder. Any amendment
or supplement to the Warrant Agreement that has a material adverse effect on the
interests of the holders of the Warrants requires the written consent of the
holders of a majority of the then outstanding Warrants. The consent of each
holder of the Warrants is required for any amendment pursuant to which the
Exercise Price would be increased or the number of Warrant Shares purchasable
34
<PAGE>
upon exercise of Warrants would be decreased (other than pursuant to adjustments
provided for in the Warrant Agreement as generally described above).
Section 18. Successors.
----------
All the covenants and provisions of this Agreement by or for the
benefit of Holdings or the Warrant Agent shall bind and inure to the benefit of
their respective successors and assigns hereunder.
Section 19. Termination.
-----------
This Agreement shall terminate at 5:00 p.m., New York City time on
April 1, 2008. Notwithstanding the foregoing, this Agreement will terminate on
any earlier date if all Warrants have been exercised. The provisions of Section
19 shall survive such termination.
Section 20. Governing Law.
-------------
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of New York and for all
purposes shall be construed in accordance with the internal laws of said State.
Section 21. Benefits of This Agreement.
--------------------------
Nothing in this Agreement shall be construed to give to any person or
corporation other than Holdings, the Warrant Agent and the registered holders of
the Warrant Certificates any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of Holdings, the Warrant Agent and the registered holders of the Warrant
Certificates.
Section 22. Counterparts.
------------
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
[Signature Page Follows]
35
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed, as of the day and year first above written.
AMERICAN MOBILE SATELLITE CORPORATION
By:
---------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY
By:
---------------------------------------
Name:
Title:
Warrant Agreement signature page(s)
36
<PAGE>
EXHIBIT A1
FORM OF WARRANT
[Face of Warrant Certificate]
[INSERT PRIVATE PLACEMENT LEGEND, IF APPLICABLE PURSUANT TO THE PROVISION OF THE
WARRANT AGREEMENT]
[INSERT GLOBAL WARRANT LEGEND, IF APPLICABLE PURSUANT TO THE TERMS OF THE
WARRANT AGREEMENT]
NOTWITHSTANDING ANY PROVISIONS OF THIS WARRANT OR ANY OTHER DOCUMENT TO
THE CONTRARY, IN THE EVENT THAT THE CONSENT OF THE FEDERAL COMMUNICATIONS
COMMISSION ("FCC") TO THE EXERCISE OF THIS WARRANT IS REQUIRED TO BE OBTAINED
PRIOR TO SUCH EXERCISE, THIS WARRANT SHALL NOT BE EXERCISABLE UNLESS AND UNTIL
SUCH FCC CONSENT SHALL HAVE BEEN OBTAINED. IN THE EVENT THAT THIS WARRANT IS
INTENDED TO BE EXERCISED AND SUCH FCC CONSENT IS REQUIRED TO BE OBTAINED,
HOLDINGS AND THE HOLDER SHALL USE COMMERCIALLY REASONABLE EFFORTS TO OBTAIN SUCH
FCC CONSENT PROMPTLY.
NOTWITHSTANDING ANY PROVISIONS OF THIS WARRANT OR ANY OTHER DOCUMENT TO
THE CONTRARY, INCLUDING BUT NOT LIMITED TO THE PRECEDING PARAGRAPH, THIS WARRANT
SHALL NOT BE EXERCISABLE IN THE EVENT THAT SUCH EXERCISE WOULD CAUSE THE
AGGREGATE ALIEN OWNERSHIP OR VOTING INTEREST IN HOLDINGS TO INCREASE TO ANY
LEVEL ABOVE 24.5%, AS DETERMINED BY APPLICABLE FCC RULES, REGULATIONS, AND
POLICIES, IT BEING WELL UNDERSTOOD THAT THIS WARRANT SHALL NOT BE EXERCISABLE IN
THE EVENT THAT SUCH ALIEN OWNERSHIP OR VOTING INTEREST ALREADY EXCEEDS 24.5%, IT
BEING FURTHER UNDERSTOOD THAT IN NO EVENT SHALL HOLDINGS BE REQUIRED HEREUNDER
TO SEEK FCC CONSENT TO EXCEED FCC ALIEN OWNERSHIP OR VOTING LIMITATIONS
APPLICABLE TO HOLDINGS.
EXERCISABLE ON OR AFTER THE SEPARATION DATE
No. ______ _________ Warrants
Warrant Certificate
AMERICAN MOBILE SATELLITE CORPORATION
This Warrant Certificate certifies that ______________, or registered
assigns, is the registered holder of Warrants expiring April 1, 2008 (the
"WARRANTS") to purchase Common Stock. Each Warrant entitles the holder upon
exercise to receive from Holdings commencing on the Separation Date (as defined
in the Warrant Agreement) until 5:00 p.m. New York City Time on April 1, 2008,
the number of fully paid and nonassessable Warrant Shares as set forth in the
Warrant Agreement, subject to adjustment as set forth in Section 8 of the
Warrant Agreement, at the initial exercise price (the "EXERCISE PRICE") of
$12.51 per share payable in lawful money of the United States of America upon
surrender of this Warrant Certificate and payment of the Exercise Price at the
office or agency of the Warrant Agent, but only subject to the conditions set
forth herein and in the Warrant Agreement referred to on the
A1-1
<PAGE>
reverse hereof. Notwithstanding the foregoing, Warrants may be exercised without
the exchange of funds pursuant to the net exercise provisions of Section 4 of
the Warrant Agreement. The Exercise Price and number of Warrant Shares issuable
upon exercise of the Warrants are subject to adjustment upon the occurrence of
certain events set forth in the Warrant Agreement. No Warrant may be exercised
after 5:00 p.m., New York City Time on April 1, 2008, and to the extent not
exercised by such time such Warrants shall become void. Reference is hereby made
to the further provisions of this Warrant Certificate set forth on the reverse
hereof and such further provisions shall for all purposes have the same effect
as though fully set forth at this place. This Warrant Certificate shall not be
valid unless countersigned by the Warrant Agent, as such term is used in the
Warrant Agreement. This Warrant Certificate shall be governed and construed in
accordance with the internal laws of the State of New York.
A1-2
<PAGE>
IN WITNESS WHEREOF, American Mobile Satellite Corporation has caused
this Warrant Certificate to be signed by its President and Treasurer and by its
Vice President and Secretary and may cause its corporate seal to be affixed
hereunto or imprinted hereon.
Dated: ________ __, 1998
AMERICAN MOBILE SATELLITE CORPORATION
By:
---------------------------------------
Name:
Title:
By:
---------------------------------------
Name:
Title:
Countersigned:
STATE STREET BANK AND TRUST COMPANY,
as Warrant Agent
By:
-------------------------------
Name:
Title:
A1-3
<PAGE>
[Reverse of Warrant Certificate]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring April 1, 2008 entitling the holder on
exercise to receive shares of Common Stock, and are issued or to be issued
pursuant to a Warrant Agreement dated as of March 31, 1998 (the "WARRANT
AGREEMENT"), duly executed and delivered by Holdings to State Street Bank and
Trust Company, as warrant agent (the "WARRANT AGENT"), which Warrant Agreement
is hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Warrant Agent, Holdings and
the holders (the words "HOLDERS" or "HOLDER" meaning the registered holders or
registered holder) of the Warrants. A copy of the Warrant Agreement may be
obtained by the holder hereof upon written request to Holdings.
Warrants may be exercised at any time on or after the Separation Date
and on or before April 1, 2008; provided that holders shall be able to exercise
their Warrants only if a registration statement relating to the Warrant Shares
is then in effect, or the exercise of such Warrants is exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and such securities are qualified for sale or exempt from
qualification under the applicable securities laws of the states in which the
various holders of the Warrants or other persons to whom it is proposed that the
Warrant Shares be issued on exercise of the Warrants reside. In order to
exercise all or any of the Warrants represented by this Warrant Certificate, (i)
in the case of Definitive Warrants, the holder must surrender for exercise this
Warrant Certificate to the Warrant Agent at its New York corporate trust office
set forth in Section 16 of the Warrant Agreement, (ii) in the case of a book-
entry interest in a Global Warrant, the exercising Participant whose name
appears on a securities position listing of the Depositary as the holder of such
book-entry interest must comply with the Depositary's procedures relating to the
exercise of such book-entry interest in such Global Warrant and (iii) in the
case of both Global Warrants and Definitive Warrants, the holder thereof or the
Participant, as applicable, must deliver to the Warrant Agent the form of
election to purchase on the reverse hereof duly filled in and signed, which
signature shall be a medallion guaranteed by an institution which is a member of
a Securities Transfer Association recognized signature guarantee program, and
upon payment to the Warrant Agent for the account of Holdings of the Exercise
Price, as adjusted as provided in the Warrant Agreement, for the number of
Warrant Shares in respect of which such Warrants are then exercised. No
adjustment shall be made for any dividends on any Common Stock issuable upon
exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but Holdings will pay the
cash value thereof determined as provided in the Warrant Agreement.
Holdings has agreed under the terms of the Warrant Agreement to file
and use its reasonable best efforts to make effective no later than the earlier
of (i) one year after the date of Warrant Agreement and (ii) 65 days after the
occurrence of a Change of Control and (subject to Black Out Periods) to maintain
effective until expiration or exercise of all Warrants shelf registration
statements (the "REGISTRATION STATEMENTS") on appropriate forms under the
Securities Act covering the issuance and resale of Warrant Shares upon exercise
of the Warrants.
A1-4
<PAGE>
Warrant Certificates, when surrendered at the office of the Warrant
Agent by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
Holdings and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither Holdings nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of Holdings.
A1-5
<PAGE>
FORM OF ELECTION TO PURCHASE
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive _______ shares of Common
Stock and herewith tenders payment for such shares to the order of Holdings in
the amount of $______ in accordance with the terms hereof unless the holder is
exercising Warrants pursuant to the net exercise provisions of Section 4 of the
Warrant Agreement in which case the holder shall tender Notes having an
aggregate principal amount at maturity, plus accrued and unpaid interest, if any
thereon, to the date of exercise equal to the Exercise Price of the Warrants
being exercised by such holder. The undersigned requests that a certificate for
such shares be registered in the name of _______________________________, whose
address is _______________________________ and that such shares be delivered to
________________ whose address is _________________________________. If said
number of shares is less than all of the shares of Common Stock purchasable
hereunder, the undersigned requests that a new Warrant Certificate representing
the remaining balance of such shares be registered in the name of
______________, whose address is _________________________, and that such
Warrant Certificate be delivered to _________________, whose address is
__________________.
Date: ______________, ____
__________________________
(Signature)
__________________________
(Signature Guaranteed)
A1-6
<PAGE>
SCHEDULE A
SCHEDULE OF WARRANTS
EVIDENCED BY THIS GLOBAL WARRANT
The initial number of Warrants evidenced by this Global Warrant shall
be 335,000. The following decreases/increases in the number of Warrants
evidenced by this Warrant have been made:
<TABLE>
<CAPTION>
Decrease in Increase in Total Number of
Number of Number of Warrants
Warrants Warrants Evidenced by this
Date of Evidenced by Evidenced by Global Warrant Notation Made
Decrease/ this Global this Global Following such by or on Behalf
Increase Warrant Warrant Decrease/ Increase of Warrant Agent
- -------------- ------------------ ----------------------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
- -------------- ------------------ ----------------------- ---------------------- ---------------------
- -------------- ------------------ ----------------------- ---------------------- ---------------------
- -------------- ------------------ ----------------------- ---------------------- ---------------------
- -------------- ------------------ ----------------------- ---------------------- ---------------------
- -------------- ------------------ ----------------------- ---------------------- ---------------------
- -------------- ------------------ ----------------------- ---------------------- ---------------------
- -------------- ------------------ ----------------------- ---------------------- ---------------------
- -------------- ------------------ ----------------------- ---------------------- ---------------------
- -------------- ------------------ ----------------------- ---------------------- ---------------------
- -------------- ------------------ ----------------------- ---------------------- ---------------------
- -------------- ------------------ ----------------------- ---------------------- ---------------------
- -------------- ------------------ ----------------------- ---------------------- ---------------------
</TABLE>
A1-7
<PAGE>
EXHIBIT A2
FORM OF WARRANT
[Face of Warrant Certificate]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO (A) OFFER, SELL,
PLEDGE OR OTHERWISE TRANSFER THIS SECURITY ONLY (1) TO HOLDINGS, (2) PURSUANT TO
A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (3) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(4) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE
UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (5) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT (AN "IAI") THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
WARRANT AGENT, AND, IN THE CASE OF ANY TRANSFER TO ANY IAI OF SECURITIES
ENTITLING THE HOLDER TO PURCHASE 10,000 OR FEWER SHARES OF COMMON STOCK, AN
OPINION OF COUNSEL IF HOLDINGS SO REQUESTS OR (6) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT
(AND BASED ON AN OPINION OF COUNSEL IF HOLDINGS SO REQUESTS), SUBJECT IN EACH OF
THE FOREGOING CASES TO APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THAT IT WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF
THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY MAKE SUCH NOTATIONS HEREON
AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE WARRANT AGREEMENT, (II) THIS
GLOBAL WARRANT MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
3.6(a) OF THE WARRANT AGREEMENT, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
WARRANT AGREEMENT FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE WARRANT AGENT
AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
PRIOR WRITTEN CONSENT OF HOLDINGS.
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL WARRANT,
AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR
A2-1
<PAGE>
CERTIFICATED WARRANTS, ARE AS SPECIFIED IN THE WARRANT AGREEMENT. NEITHER THE
HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL WARRANT
SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
NOTWITHSTANDING ANY PROVISIONS OF THIS WARRANT OR ANY OTHER DOCUMENT
TO THE CONTRARY, IN THE EVENT THAT THE CONSENT OF THE FEDERAL COMMUNICATIONS
COMMISSION ("FCC") TO THE EXERCISE OF THIS WARRANT IS REQUIRED TO BE OBTAINED
PRIOR TO SUCH EXERCISE, THIS WARRANT SHALL NOT BE EXERCISABLE UNLESS AND UNTIL
SUCH FCC CONSENT SHALL HAVE BEEN OBTAINED. IN THE EVENT THAT THIS WARRANT IS
INTENDED TO BE EXERCISED AND SUCH FCC CONSENT IS REQUIRED TO BE OBTAINED,
HOLDINGS AND THE HOLDER SHALL USE COMMERCIALLY REASONABLE EFFORTS TO OBTAIN SUCH
FCC CONSENT PROMPTLY.
NOTWITHSTANDING ANY PROVISIONS OF THIS WARRANT OR ANY OTHER DOCUMENT
TO THE CONTRARY, INCLUDING BUT NOT LIMITED TO THE PRECEDING PARAGRAPH, THIS
WARRANT SHALL NOT BE EXERCISABLE IN THE EVENT THAT SUCH EXERCISE WOULD CAUSE THE
AGGREGATE ALIEN OWNERSHIP OR VOTING INTEREST IN HOLDINGS TO INCREASE TO ANY
LEVEL ABOVE 24.5%, AS DETERMINED BY APPLICABLE FCC RULES, REGULATIONS, AND
POLICIES, IT BEING WELL UNDERSTOOD THAT THIS WARRANT SHALL NOT BE EXERCISABLE IN
THE EVENT THAT SUCH ALIEN OWNERSHIP OR VOTING INTEREST ALREADY EXCEEDS 24.5%, IT
BEING FURTHER UNDERSTOOD THAT IN NO EVENT SHALL HOLDINGS BE REQUIRED HEREUNDER
TO SEEK FCC CONSENT TO EXCEED FCC ALIEN OWNERSHIP OR VOTING LIMITATIONS
APPLICABLE TO HOLDINGS.
EXERCISABLE ON OR AFTER THE SEPARATION DATE
No. ______ _________ Warrants
Warrant Certificate
AMERICAN MOBILE SATELLITE CORPORATION
This Warrant Certificate certifies that ______________, or registered
assigns, is the registered holder of Warrants expiring April 1, 2008 (the
"WARRANTS") to purchase Common Stock. Each Warrant entitles the holder upon
exercise to receive from Holdings commencing on the Separation Date (as defined
in the Warrant Agreement) until 5:00 p.m. New York City Time on April 1, 2008,
the number of fully paid and nonassessable Warrant Shares as set forth in the
Warrant Agreement, subject to adjustment as set forth in Section 8 of the
Warrant Agreement, at the initial exercise price (the "EXERCISE PRICE") of
$12.51 per share payable in lawful money of the United States of America upon
surrender of this Warrant Certificate and payment of the Exercise Price at the
office or agency of the Warrant Agent, but only subject to the conditions set
forth herein and in the Warrant Agreement referred to on the reverse hereof.
Notwithstanding the foregoing, Warrants may be exercised without the exchange of
funds pursuant to the net exercise provisions of Section 4 of the Warrant
Agreement. The Exercise Price and number of Warrant Shares issuable upon
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events set forth in the Warrant Agreement. No Warrant may be exercised
after 5:00 p.m., New York City Time on April 1, 2008, and to the extent not
exercised by such time such Warrants shall become void. Reference is hereby
made to the further provisions of this Warrant Certificate set forth on the
reverse hereof and such further provisions shall for all purposes have the same
A2-2
<PAGE>
effect as though fully set forth at this place. This Warrant Certificate shall
not be valid unless countersigned by the Warrant Agent, as such term is used in
the Warrant Agreement. This Warrant Certificate shall be governed and construed
in accordance with the internal laws of the State of New York.
A2-3
<PAGE>
IN WITNESS WHEREOF, American Mobile Satellite Corporation has caused
this Warrant Certificate to be signed by its President and Treasurer and by its
Vice President and Secretary and may cause its corporate seal to be affixed
hereunto or imprinted hereon.
Dated: ________ __, 1998
AMERICAN MOBILE SATELLITE CORPORATION
By:
---------------------------------------
Name:
Title:
By:
---------------------------------------
Name:
Title:
Countersigned:
STATE STREET BANK AND TRUST COMPANY,
as Warrant Agent
By:
-----------------------------
Name:
Title:
A2-4
<PAGE>
[Reverse of Warrant Certificate]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring April 1, 2008 entitling the holder on
exercise to receive shares of Common Stock, and are issued or to be issued
pursuant to a Warrant Agreement dated as of March 31, 1998 (the "WARRANT
AGREEMENT"), duly executed and delivered by Holdings to State Street Bank and
Trust Company, as warrant agent (the "WARRANT AGENT"), which Warrant Agreement
is hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Warrant Agent, Holdings and
the holders (the words "HOLDERS" or "HOLDER" meaning the registered holders or
registered holder) of the Warrants. A copy of the Warrant Agreement may be
obtained by the holder hereof upon written request to Holdings.
Warrants may be exercised at any time on or after the Separation Date
and on or before April 1, 2008; provided that holders shall be able to exercise
their Warrants only if a registration statement relating to the Warrant Shares
is then in effect, or the exercise of such Warrants is exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and such securities are qualified for sale or exempt from
qualification under the applicable securities laws of the states in which the
various holders of the Warrants or other persons to whom it is proposed that the
Warrant Shares be issued on exercise of the Warrants reside. In order to
exercise all or any of the Warrants represented by this Warrant Certificate, (i)
in the case of Definitive Warrants, the holder must surrender for exercise this
Warrant Certificate to the Warrant Agent at its New York corporate trust office
set forth in Section 16 of the Warrant Agreement, (ii) in the case of a book-
entry interest in a Global Warrant, the exercising Participant whose name
appears on a securities position listing of the Depositary as the holder of such
book-entry interest must comply with the Depositary's procedures relating to the
exercise of such book-entry interest in such Global Warrant and (iii) in the
case of both Global Warrants and Definitive Warrants, the holder thereof or the
Participant, as applicable, must deliver to the Warrant Agent the form of
election to purchase on the reverse hereof duly filled in and signed, which
signature shall be a medallion guaranteed by an institution which is a member of
a Securities Transfer Association recognized signature guarantee program, and
upon payment to the Warrant Agent for the account of Holdings of the Exercise
Price, as adjusted as provided in the Warrant Agreement, for the number of
Warrant Shares in respect of which such Warrants are then exercised. No
adjustment shall be made for any dividends on any Common Stock issuable upon
exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but Holdings will pay the
cash value thereof determined as provided in the Warrant Agreement.
Holdings has agreed under the terms of the Warrant Agreement to file
and use its reasonable best efforts to make effective no later than the earlier
of (i) one year after the date of Warrant Agreement and (ii) 65 days after the
occurrence of a Change of Control and (subject to Black Out Periods) to maintain
effective until expiration or exercise of all Warrants shelf registration
statements (the "REGISTRATION STATEMENTS") on appropriate forms under the
Securities Act covering the issuance and resale of Warrant Shares upon exercise
of the Warrants.
A2-5
<PAGE>
Warrant Certificates, when surrendered at the office of the Warrant
Agent by the registered holder thereof in person or by a legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
Holdings and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither Holdings nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of Holdings.
A2-6
<PAGE>
FORM OF ELECTION TO PURCHASE
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ shares of Common
Stock and herewith tenders payment for such shares to the order of Holdings in
the amount of $______ in accordance with the terms hereof unless the holder is
exercising Warrants pursuant to the net exercise provisions of Section 4 of the
Warrant Agreement in which case the holder shall tender Notes having an
aggregate principal amount at maturity, plus accrued and unpaid interest, if any
thereon, to the date of exercise equal to the Exercise Price of the Warrants
being exercised by such holder. The undersigned requests that a certificate for
such shares be registered in the name of _______________________________, whose
address is _______________________________ and that such shares be delivered to
________________ whose address is _________________________________. If said
number of shares is less than all of the shares of Common Stock purchasable
hereunder, the undersigned requests that a new Warrant Certificate representing
the remaining balance of such shares be registered in the name of
______________, whose address is _________________________, and that such
Warrant Certificate be delivered to _________________, whose address is
__________________.
Date: ______________, ____
__________________________
(Signature)
__________________________
(Signature Guaranteed)
A2-7
<PAGE>
SCHEDULE A
SCHEDULE OF WARRANTS
EVIDENCED BY THIS GLOBAL WARRANT
The initial number of Warrants evidenced by this Global Warrant shall
be 335,000. The following decreases/increases in the number of Warrants
evidenced by this Warrant have been made:
<TABLE>
<CAPTION>
Decrease in Increase in Total Number of
Number of Number of Warrants
Warrants Warrants Evidenced by this
Date of Evidenced by Evidenced by Global Warrant Notation Made
Decrease/ this Global this Global Following such by or on Behalf
Increase Warrant Warrant Decrease/ Increase of Warrant Agent
- -------------- ----------------- -------------------- -------------------------- --------------------
<S> <C> <C> <C> <C>
- -------------- ----------------- -------------------- -------------------------- --------------------
- -------------- ----------------- -------------------- -------------------------- --------------------
- -------------- ----------------- -------------------- -------------------------- --------------------
- -------------- ----------------- -------------------- -------------------------- --------------------
- -------------- ----------------- -------------------- -------------------------- --------------------
- -------------- ----------------- -------------------- -------------------------- --------------------
- -------------- ----------------- -------------------- -------------------------- --------------------
- -------------- ----------------- -------------------- -------------------------- --------------------
- -------------- ----------------- -------------------- -------------------------- --------------------
- -------------- ----------------- -------------------- -------------------------- --------------------
- -------------- ----------------- -------------------- -------------------------- --------------------
</TABLE>
A2-8
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
American Mobile Satellite Corporation
10802 Parkridge Blvd.
Reston, Virginia 20191-5416
Attention: Randy S. Segal, Esq.,
State Street Bank and Trust Company
Goodwin Square
225 Asylum Street
Hartford, Connecticut 01603
Attention: Steven Cimalore
Re: 335,000 Warrants to Purchase 1,258,759 Shares of Common Stock
-------------------------------------------------------------
(CUSIP __________)
Reference is hereby made to the Warrant Agreement, dated as of March
31, 1998 (the "WARRANT AGREEMENT"), among American Mobile Satellite Corporation,
as issuer (the "HOLDINGS"), and State Street Bank and Trust Company, as Warrant
Agent. Capitalized terms used but not defined herein shall have the meanings
given to them in the Warrant Agreement.
______________, (the "TRANSFEROR") owns and proposes to transfer the
Warrant[s] or interest in such Warrant[s] specified in Annex A hereto, in the
amount of ___________ in such Warrant[s] or interests (the "TRANSFER"), to
__________ (the "TRANSFEREE"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
----------------------------------------------------------------------
144A GLOBAL WARRANT OR A DEFINITIVE WARRANT PURSUANT TO RULE 144A. The Transfer
- -----------------------------------------------------------------
is being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "SECURITIES ACT"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Warrant is being transferred to a Person that the
Transferor reasonably believed and believes is purchasing the beneficial
interest or Definitive Warrant for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion, and such
Person and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and
such Transfer is in compliance with any applicable blue sky securities laws of
any state of the United States. Upon consummation of the proposed Transfer in
accordance with the terms of the Warrant Agreement, the transferred beneficial
interest or Definitive Warrant will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the 144A Global Warrant
and/or the Definitive Warrant and in the Warrant Agreement and the Securities
Act.
2. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
----------------------------------------------------------------------
TEMPORARY REGULATION S GLOBAL WARRANT, THE REGULATION S GLOBAL WARRANT OR A
- ---------------------------------------------------------------------------
DEFINITIVE WARRANT PURSUANT TO REGULATION S. The Transfer is being effected
- -------------------------------------------
pursuant to and in accordance with Rule 903 or Rule
B-1
<PAGE>
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United
States or (y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged with a buyer in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act and, (iii) the transaction is not part of a plan or
scheme to evade the registration requirements of the Securities Act and (iv) if
the proposed transfer is being made prior to the expiration of the Restricted
Period, the transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of
the proposed transfer in accordance with the terms of the Warrant Agreement, the
transferred beneficial interest or Definitive Warrant will be subject to the
restrictions on Transfer enumerated in the Private Placement Legend printed on
the Regulation S Global Warrant, the Temporary Regulation S Global Warrant
and/or the Definitive Warrant and in the Warrant Agreement and the Securities
Act.
3. [_] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
-------------------------------------------------------------------
INTEREST IN THE IAI GLOBAL WARRANT OR A DEFINITIVE WARRANT PURSUANT TO ANY
- --------------------------------------------------------------------------
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
- --------------------------------------------------------------------
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Warrants and Restricted
Definitive Warrants and pursuant to and in accordance with the Securities Act
and any applicable blue sky securities laws of any state of the United States,
and accordingly the Transferor hereby further certifies that (check one):
(a) [_] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) [_] such Transfer is being effected to Holdings or a subsidiary
thereof;
or
(c) [_] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [_] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that it has not engaged in any general solicitation
within the meaning of Regulation D under the Securities Act and the Transfer
complies with the transfer restrictions applicable to beneficial interests in a
Restricted Global Warrant or Restricted Definitive Warrants and the requirements
of the exemption claimed, which certification is supported by (1) a certificate
executed by the Transferee in the form of Exhibit D to the Warrant Agreement and
(2) if such Transfer is in respect of ___________ of Warrants at the time of
transfer of less than $250,000, an Opinion of Counsel provided by the Transferor
or the Transferee (a copy of which the Transferor has
B-2
<PAGE>
attached to this certification), to the effect that such Transfer is in
compliance with the Securities Act. Upon consummation of the proposed transfer
in accordance with the terms of the Warrant Agreement, the transferred
beneficial interest or Definitive Warrant will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the IAI Global
Warrant and/or the Definitive Warrants and in the Warrant Agreement and the
Securities Act.
4. [_] Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Warrant or of an Unrestricted Definitive Warrant.
(a) [_] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Warrant
Agreement and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Warrant Agreement
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Warrant Agreement, the transferred
beneficial interest or Definitive Warrant will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Warrants, on Restricted Definitive Warrants and in the
Warrant Agreement.
(b) [_] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Warrant Agreement and any applicable blue sky securities laws
of any state of the United States and (ii) the restrictions on transfer
contained in the Warrant Agreement and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act. Upon
consummation of the proposed Transfer in accordance with the terms of the
Warrant Agreement, the transferred beneficial interest or Definitive Warrant
will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Warrants, on
Restricted Definitive Warrants and in the Warrant Agreement.
(c) [_] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Warrant Agreement and any applicable blue sky securities laws of any State
of the United States and (ii) the restrictions on transfer contained in the
Warrant Agreement and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Warrant Agreement, the transferred
beneficial interest or Definitive Warrant will not be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Warrants or Restricted Definitive Warrants and in the
Warrant Agreement.
B-3
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of Holdings.
--------------------------------------
[Insert Name of Transferor]
By:
-----------------------------------
Name:
Title:
Dated: ________ __, ____
B-4
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Warrant (CUSIP _________), or
(ii) [_] Regulation S Global Warrant (CUSIP _________), or
(iii) [_] IAI Global Warrant (CUSIP ________); or
(b) [_] a Restricted Definitive Warrant.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Warrant (CUSIP ________), or
(ii) [_] Regulation S Global Warrant (CUSIP ________), or
(iii) [_] IAI Global Warrant (CUSIP ________); or
(iv) [_] Unrestricted Global Warrant (CUSIP ________); or
(b) [_] a Restricted Definitive Warrant; or
(c) [_] an Unrestricted Definitive Warrant,
in accordance with the terms of the Warrant Agreement.
B-5
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
American Mobile Satellite Corporation
10802 Parkridge Blvd.
Reston, Virginia 20191-5416
Attention: Randy S. Segal, Esq.
State Street Bank and Trust Company
Goodwin Square
225 Asylum Street
Hartford, Connecticut 06103
Attention: Steven Cimalore
Re: 335,000 Warrants to Purchase 1,258,759 Shares of Common Stock
-------------------------------------------------------------
(CUSIP __________)
Reference is hereby made to the Warrant Agreement, dated as of
March 31, 1998 (the "WARRANT AGREEMENT"), among American Mobile Satellite
Corporation, as issuer (the "HOLDINGS"), and State Street Bank and Trust
Company, as Warrant Agent. Capitalized terms used but not defined herein shall
have the meanings given to them in the Warrant Agreement.
____________, (the "OWNER") owns and proposes to exchange the
Warrant[s] or interest in such Warrant[s] specified herein, in the amount of
____________ in such Warrant[s] or interests (the "EXCHANGE"). In connection
with the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE WARRANTS OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL WARRANT FOR UNRESTRICTED DEFINITIVE WARRANTS OR BENEFICIAL
INTERESTS IN AN UNRESTRICTED GLOBAL WARRANT
(a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
-------------------------------------------------------------
GLOBAL WARRANT TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL WARRANT. In
- -----------------------------------------------------------------------
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Warrant for a beneficial interest in an Unrestricted Global Warrant in an
equal amount, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Global Warrants and pursuant to and in accordance with the United States
Securities Act of 1933, as amended (the "SECURITIES ACT"), (iii) the
restrictions on transfer contained in the Warrant Agreement and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the beneficial interest in an Unrestricted Global
Warrant is being acquired in compliance with any applicable blue sky securities
laws of any state of the United States.
(b) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
-------------------------------------------------------------
GLOBAL WARRANT TO UNRESTRICTED DEFINITIVE WARRANT. In connection with the
- -------------------------------------------------
Exchange of the Owner's beneficial interest in a Restricted Global Warrant for
an Unrestricted Definitive Warrant, the Owner hereby certifies (i) the
Definitive Warrant is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to
C-1
<PAGE>
the Restricted Global Warrants and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Warrant
Agreement and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Definitive Warrant is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(c) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE WARRANT TO
----------------------------------------------------------
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL WARRANT. In connection with the
- -----------------------------------------------------
Owner's Exchange of a Restricted Definitive Warrant for a beneficial interest in
an Unrestricted Global Warrant, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Warrants and pursuant to and in accordance
with the Securities Act, (iii) the restrictions on transfer contained in the
Warrant Agreement and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the beneficial interest is
being acquired in compliance with any applicable blue sky securities laws of any
state of the United States.
(d) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE WARRANT TO
----------------------------------------------------------
UNRESTRICTED DEFINITIVE WARRANT. In connection with the Owner's Exchange of a
- -------------------------------
Restricted Definitive Warrant for an Unrestricted Definitive Warrant, the Owner
hereby certifies (i) the Unrestricted Definitive Warrant is being acquired for
the Owner's own account without transfer, (ii) such Exchange has been effected
in compliance with the transfer restrictions applicable to Restricted Definitive
Warrants and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Warrant Agreement and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the Unrestricted Definitive Warrant is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE WARRANTS OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL WARRANTS FOR RESTRICTED DEFINITIVE WARRANTS OR BENEFICIAL
INTERESTS IN RESTRICTED GLOBAL WARRANTS.
(a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
-------------------------------------------------------------
GLOBAL WARRANT TO RESTRICTED DEFINITIVE WARRANT. In connection with the
- -----------------------------------------------
Exchange of the Owner's beneficial interest in a Restricted Global Warrant for a
Restricted Definitive Warrant with an equal amount, the Owner hereby certifies
that the Restricted Definitive Warrant is being acquired for the Owner's own
account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Warrant Agreement, the Restricted Definitive
Warrant issued will continue to be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Definitive
Warrant and in the Warrant Agreement and the Securities Act.
C-2
<PAGE>
(b) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE WARRANT TO
----------------------------------------------------------
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL WARRANT. In connection with the
- --------------------------------------------------
Exchange of the Owner's Restricted Definitive Warrant for a beneficial interest
in the [CHECK ONE] [_] 144A Global Warrant, [_] Regulation S Global Warrant,
[_] IAI Global Warrant with an equal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Warrants and pursuant
to and in accordance with the Securities Act, and in compliance with any
applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Exchange in accordance with the terms of the
Warrant Agreement, the beneficial interest issued will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the relevant Restricted Global Warrant and in the Warrant Agreement and the
Securities Act.
C-3
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of Holdings.
----------------------------------
[Insert Name of Owner]
By:
-------------------------------
Name:
Title:
Dated: ________________, ____
C-4
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
American Mobile Satellite Corporation
10802 Parkridge Blvd.
Reston, Virginia 20191-5416
Attention: Randy S. Segal, Esq.
State Street Bank and Trust Company
Goodwin Square
225 Asylum Street
Hartford, Connecticut 06103
Attention: Steven Cimalore
Re: 335,000 Warrants to Purchase 1,258,759 Shares of Common Stock
-------------------------------------------------------------
(CUSIP __________)
Reference is hereby made to the Warrant Agreement, dated as of March
31, 1998 (the "WARRANT AGREEMENT"), among American Mobile Satellite Corporation,
as issuer (the "HOLDINGS"), and State Street Bank and Trust Company, as Warrant
Agent. Capitalized terms used but not defined herein shall have the meanings
given to them in the Warrant Agreement.
In connection with our proposed purchase of ____________ amount of:
(a) [_] a beneficial interest in a Global Warrant, or
(b) [_] a Definitive Warrant,
we confirm that:
1. We understand that any subsequent transfer of the Warrants or any
interest therein is subject to certain restrictions and conditions set forth in
the Warrant Agreement and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Warrants or any interest therein except
in compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "SECURITIES ACT").
2. We understand that the offer and sale of the Warrants have not
been registered under the Securities Act, and that the Warrants and any interest
therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which
we are acting as hereinafter stated, that if we should sell the Warrants or any
interest therein, we will do so only (A) to Holdings or any subsidiary thereof,
(B) in accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined therein), (c) to an institutional "accredited
investor" (as defined below) that, prior to such transfer, furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to you and to Holdings a signed
letter substantially in the form of this letter and, if such transfer is in
respect of a __________ of Warrants, at the time of transfer of less than
$250,000, an
D-1
<PAGE>
Opinion of Counsel in form reasonably acceptable to Holdings to the effect that
such transfer is in compliance with the Securities Act, (D) outside the United
States in accordance with Rule 904 of Regulation S under the Securities Act, (E)
pursuant to the provisions of Rule 144(k) under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing the Definitive Warrant or
beneficial interest in a Global Warrant from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Warrants or
beneficial interest therein, we will be required to furnish to you and Holdings
such certifications, legal opinions and other information as you and Holdings
may reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Warrants purchased by us
will bear a legend to the foregoing effect. We further understand that any
subsequent transfer by us of the Warrants or beneficial interest therein
acquired by us must be effected through one of the Initial Purchasers.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Warrants, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Warrants or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and Holdings are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
------------------------------------------
[Insert Name of Accredited Investor]
By:
---------------------------------------
Name:
Title:
D-2
<PAGE>
EXHIBIT 4.5
================================================================================
WARRANT REGISTRATION RIGHTS AGREEMENT
March 31, 1998
By and Among
AMERICAN MOBILE SATELLITE CORPORATION
and
BEAR, STEARNS & CO. INC.,
J.P. MORGAN SECURITIES INC.,
T.D. SECURITIES (USA) INC.
BANCAMERICA ROBERTSON STEPHENS
================================================================================
<PAGE>
WARRANT REGISTRATION RIGHTS AGREEMENT
THIS WARRANT REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made
and entered into as of March 31, 1998, by and among American Mobile Satellite
Corporation, a Delaware corporation (the "HOLDINGS"), Bear, Stearns & Co. Inc.,
J.P. Morgan Securities Inc., TD Securities (USA) Inc. and BancAmerica Robertson
Stephens (collectively, the "INITIAL PURCHASERS").
This Agreement is made pursuant to the Purchase Agreement dated March
31, 1998, among Holdings, AMSC Acquisition Company, Inc. (the "COMPANY"), the
Guarantors (as defined in the Purchaser Agreement) and the Initial Purchasers
(the "PURCHASE AGREEMENT"), relating to, among other things, the sale by
Holdings and the Company to the Initial Purchasers of an aggregate of 335,000
Units, consisting in the aggregate of (i) $335,000,000 principal amount at
maturity of 12 1/4% Senior Notes due 2008 of the Company (the "SENIOR NOTES")
and (ii) 335,000 Warrants (the "WARRANTS"), each representing the right to
purchase initially 3.75749 shares of Common Stock, par value $.01 per share, of
Holdings (the "COMMON STOCK"). The Warrants have been issued pursuant to the
Warrant Agreement dated as of the date hereof between the Company and State
Street Bank and Trust Company, as warrant agent (the "WARRANT AGREEMENT"). In
order to induce the Initial Purchasers to enter into the Purchase Agreement,
Holdings has agreed to provide to the Initial Purchasers and the Holders (as
defined herein), among other things, the registration rights for the Warrant
Shares (as defined herein) set forth in this Agreement. The execution and
delivery of this Agreement is a condition to the obligations of the Initial
Purchasers under the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
ACT: The Securities Act of 1933, as amended.
BUSINESS DAY: Any day except a Saturday, Sunday or other day in the
City of New York, or in the city of the corporate trust office of the Trustee,
on which banks are authorized to close.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
COMMON STOCK: The common stock, $.01 par value, of the Company.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended from
time to time.
EXCHANGE OFFER: As defined in the A/B Exchange Registration Rights
Agreement, dated the Closing Date, among Holdings, the Company, the Guarantors
and the Initial Purchasers.
HOLDERS: As defined in Section 2 hereof.
INDENTURE: The Indenture, dated the Closing Date, among Holdings, the
Company, the Guarantors and State Street Bank and Trust Company, as trustee (the
"TRUSTEE"), pursuant to which the
<PAGE>
Senior Notes are to be issued, as such Indenture is amended or supplemented from
time to time in accordance with the terms thereof.
NASD: National Association of Securities Dealers, Inc.
OFFERING MEMORANDUM: The Offering Memorandum of Holdings and the
Company dated March 26, 1998, relating to the Offering of the Units.
PERSON: An individual, partnership, corporation, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.
PROSPECTUS: The prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
REGISTRABLE SECURITIES: The Warrants, Warrant Shares and any other
securities issued or issuable with respect to the Warrants or the Warrant Shares
by way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization;
provided that a security ceases to be a Registrable Security when it is no
longer a Transfer Restricted Security.
REGISTRATION EXPENSES: As defined in Section 6 hereof.
REGISTRATION STATEMENT: Any registration statement of Holdings which
covers Registrable Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such Registration
Statement, including post-effective amendments, and all exhibits and all
material incorporated by reference in such Registration Statement.
SELLING HOLDER: Means a Holder who is selling Registrable Securities
pursuant to Section 3 hereof.
TRANSFER RESTRICTED SECURITIES: A Warrant or Warrant Share, until
such Warrant or Warrant Share, as applicable, (i) has been effectively
registered under the Act and disposed of in accordance with the Registration
Statement covering it, (ii) is distributed to the public pursuant to Rule 144 or
(iii) may be sold or transferred pursuant to Rule 144(k) (or any similar
provisions then in force) under the Act or otherwise.
WARRANTS: The warrants of Holdings issued and sold pursuant to the
Purchase Agreement and the Warrant Agreement, together with any warrants issued
in substitution or replacement therefor.
WARRANT AGREEMENT: The Warrant Agreement dated the Closing Date by
and between Holdings and State Street Ban and Trust Company as Warrant Agent.
WARRANT SHARES: The Common Stock or other securities which any Holder
may acquire upon exercise of a Warrant, together with any other securities which
such Holder may acquire on account of any such securities, including, without
limitation, as the result of any dividend or other distribution on Common Stock
or any split-up of such Common Stock as provided for in the Warrant Agreement.
2
<PAGE>
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Registrable Securities. The securities entitled to the benefits
----------------------
of this Agreement are the Registrable Securities.
(b) Holders of Registrable Securities. A Person is deemed to be a
---------------------------------
Holder of Registrable Securities whenever such Person owns Registrable
Securities or has the right to acquire such Registrable Securities, whether or
not such acquisition has actually been effected and disregarding any legal
restrictions upon the exercise of such right.
SECTION 3. SHELF REGISTRATION
(1) Holdings shall file and use its best efforts to be declared
effective, by the earlier of (i) the date that is one year after the date hereof
and (ii) 65 days after the occurrence of a Change of Control (the "COMMENCEMENT
DATE"), a "shelf" registration with respect to all Registrable Securities on any
appropriate form pursuant to Rule 415 (or similar rule that may be adopted by
the Commission) under the Act (the "SHELF REGISTRATION") covering the resale of
the Warrants and issuance of the Warrant Shares by Holdings upon exercise of the
Warrants. Notwithstanding the foregoing, Holdings shall not be required to file
such Shelf Registration on or prior to the consummation of the Exchange Offer;
provided that, in the event the Exchange Offer is consummated later than the
filing time required by the preceding sentence for the Shelf Registration,
Holdings shall file such Shelf Registration within 30 days after the date of the
consummation of the Exchange Offer.
(2) If the Holders of a majority of the Registrable Securities to be
registered in the Shelf Registration so elect, an offering of Registrable
Securities pursuant to the Shelf Registration may be effected in the form of an
underwritten offering of Warrant Shares. In such event, and if the managing
underwriters advise Holdings and the Holders of such Registrable Securities in
writing that in their opinion the amount of Warrant Shares proposed to be sold
in such offering exceeds the amount of Warrant Shares which can be sold in such
offering, there shall be included in such underwritten offering the amount of
such Warrant Shares which in the opinion of such underwriters can be sold, and
such amount shall be allocated pro rata among the Holders of such Warrant Shares
on the basis of the number of Warrant Shares requested to be included by such
Holders. Registrable Securities not sold in an underwritten offering
contemplated by this Section 3(2) shall continue to be registered pursuant to
the Shelf Registration for the period provided for in Section 3(4); provided
that such period shall be extended on a day-for-day basis for every day that the
Holders of Registrable Securities not sold in the underwritten offering are
subject to the holdback provided for in Section 3(6) below. The Holders of the
Warrant Shares to be registered shall pay all underwriting discounts and
commissions of such underwriters.
(3) If any of the Registrable Securities covered by the Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will administer the offering
will be selected by the Holders of a majority in aggregate principal amount of
such Registrable Securities included in such offering; provided that such
investment bank or manager shall be reasonably satisfactory to Holdings.
(4) Holdings shall use its best efforts to keep the Shelf Registration
continuously effective until the earlier of (i) all of the Registrable
Securities cease to be Transfer Restricted Securities, or (ii) April 1, 2008,
and, to the extent that the Shelf Registration is kept not effective for one or
more days during such period, Holdings shall be required to extend the
effectiveness of the Shelf Registration
3
<PAGE>
for a like number of days after the expiration of the such period (it being
expressly acknowledged that such extension of the required period of
effectiveness is in addition to, and not in lieu of, the payment of liquidated
damages as provided in Section 4 hereof).
(5) Holdings further agrees to use its best efforts to prevent the
happening of any event that would cause any Registration Statement made pursuant
to Section 3 hereof to contain a material misstatement or omission or to be not
effective and usable for resale of the Registrable Securities during the period
that such Registration Statement is required to be effective and usable.
(6) Each Holder of Registrable Securities whose Registrable Securities
are covered by a Registration Statement filed pursuant to this Section 3 agrees,
if requested by the managing underwriters in an underwritten offering of Common
Stock, not to effect any public sale or distribution of securities of Holdings
of the same class as any Securities included in such Registration Statement,
including a sale pursuant to Rule 144 under the Act (except as part of such
underwritten registration), during the 10-day period prior to, and during the
90-day period beginning on, the closing date of the underwritten offering made
pursuant to such Registration Statement, to the extent timely notified in
writing by Holdings or the managing underwriters; provided that each Holder of
Registrable Securities shall be subject to the hold-back restrictions of this
Section 3(6) only once during the term of this Agreement.
The foregoing provisions shall not apply to any Holder of Registrable
Securities if such Holder is prevented by applicable statute or regulation from
entering into any such agreement; provided that any such Holder shall undertake,
in its request to participate in any such underwritten offering, not to effect
any public sale or distribution of any applicable class of Registrable
Securities commencing on the date of sale of such applicable class of
Registrable Securities unless it has provided 45 days prior written notice of
such sale or distribution to the underwriter or underwriters.
SECTION 4. HOLDER INFORMATION
No Holder of Registrable Securities may include any of its Registrable
Securities in the Shelf Registration Statement pursuant to this Agreement unless
and until such Holder furnishes to Holdings in writing such information Holdings
may reasonably request specified in Item 507 and Item 508 of Regulation S-K
under the Act for use in connection with the Shelf Registration Statement or
Prospectus or Preliminary Prospectus included therein. Each Holder agrees to
furnish promptly to Holdings all information required to be disclosed in order
to make the information previously furnished to Holdings by such Holder not
materially misleading.
SECTION 5. BLACK OUT PERIOD
During any consecutive 365 day period, Holdings may suspend the
effectiveness of the Shelf Registration Statement on two occasions for a period
of not more than 45 consecutive days if there is a possible acquisition or
business combination or other transaction, business development or event
involving Holdings that may require disclosure in the Shelf Registration
Statement and the Board of Directors of Holdings determines in the exercise of
its reasonable judgment that such disclosure is not in the best interests of
Holdings and its stockholders or obtaining any financial statements relating to
an acquisition or business combination required to be included in the Shelf
Registration Statement would be impracticable. In such a case, Holdings shall
promptly notify the Holders of the suspension of the Shelf Registration
Statements effectiveness, provided that such notice shall not require Holdings
to disclose the possible acquisition or business combination or other
transaction, business development or event if
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the Board of Directors of Holdings determines in good faith that such
acquisition or business combination or other transaction, business development
or even should remain confidential. Upon the abandonment, consummation, or
termination of the possible acquisition or business combination or other
transaction, business development or event, or the availability of the required
financial statements with respect to a possible acquisition or business
combination, the suspension of the use of the Shelf Registration Statement
pursuant to this Section 5 shall cease and Holdings shall promptly comply with
Section 7(a)(2) hereof and notify the Holders that disposition of Registrable
Securities may be resumed. Notwithstanding anything to the contrary in this
Agreement, however, Holdings may not suspend the effectiveness of the Shelf
Registration Statement or permit any such suspension to continue at any time
after 45 days before the expiration of the Warrants.
SECTION 6. LIQUIDATED DAMAGES
If the Registration Statement: (i) is not filed with the Commission
on or prior to the date specified for such filing in Section 3(1) hereof; (ii)
has not been declared effective by the Commission on or prior to the dated
specified for such effectiveness in Section 3(1) hereof; or (iii) following the
date such Registration Statement is declared effective by the Commission, shall
cease to be effective without being restored to effectiveness by amendment or
otherwise within 30 business days, (each such event referred to in clauses (i)
through (iii), a "SHELF REGISTRATION DEFAULT") to the extent permitted by
applicable law, the Company shall pay as liquidated damages and not as a penalty
to each Holder during the first 90-day period immediately following the
occurrence, and during the continuance of such Shelf Registration Default, an
amount equal to $.025 per week per Warrant (or per such number of Warrant Shares
then issuable upon exercise of or in respect of a Warrant) held by such Holder
for each week or portion thereof that the Shelf Registration Default continues.
To the extent permitted by applicable law, the amount of the liquidated damages
will increase by an additional $.025 per week per Warrant (or per such number of
Warrant Shares then issuable upon exercise of or in respect of a Warrant) with
respect to each subsequent 90-day period until all Shelf Registration Defaults
have been cured, up to a maximum amount of liquidated damages of $.125 per week
per Warrant (or per such number of Warrant Shares then issuable upon exercise of
or in respect of a Warrant).
All accrued liquidated damages shall be paid to record Holders by the
Company by wire transfer of immediately available funds, or by mailing a federal
funds check, on each Interest Payment Date (as defined in the Indenture). All
obligations of the Company set forth in the preceding paragraph that are
outstanding with respect to any Registrable Security at the time such security
has been effectively registered under the Act shall survive until such time as
all such obligations with respect to such security have been satisfied in full.
SECTION 7. REGISTRATION PROCEDURES
(a) General Provisions. In connection with Holdings' registration
-------------------
obligations pursuant to Section 3 hereof, Holdings will use its best efforts to
effect such registration to permit the sale of such Registrable Securities in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto Holdings will as expeditiously as possible:
(1) use its best efforts to keep such Registration Statement
continuously effective for the 180-day period following the Commencement Date
and provide or incorporate by reference all requisite financial statements for
such period. Upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain a
material misstatement or omission or (B) not to be effective and usable for
resale of Registrable Securities during the period
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required by this Agreement, Holdings shall file promptly an appropriate
amendment to such Registration Statement or file appropriate documents that will
be so incorporated by reference, (1) in the case of clause (A), correcting any
such misstatement or omission, and (2) in the case of either clause (A) or (B),
use its best efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for their
intended purpose(s) as soon as practicable thereafter;
(2) prepare and file with the Commission such amendments and post-
effective amendments to the Registration Statement as may be necessary to keep
the Registration Statement effective for the period set forth in Section 3(4),
cause the Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the Act; and
comply in all material respects with the provisions of the Act with respect to
the disposition of all securities covered by such Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus; Holdings shall not be deemed to have used its best
efforts to keep a Registration Statement effective during the applicable period
if it voluntarily takes any action that would result in Holders of the
Registrable Securities covered thereby not being able to exercise their Warrants
or sell such Registrable Securities during that period unless such action is
required under applicable law, provided that the foregoing shall not apply to
actions taken by Holdings in good faith and for valid business reasons,
including without limitation the acquisition or divestiture of assets, so long
as Holdings promptly thereafter complies with the requirements of clause (14)
below, if applicable;
(3) advise the underwriter(s), if any, and Holders promptly and, if
requested by such Persons, confirm such advice in writing, (A) when the
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to any Registration Statement or any post-effective
amendment thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating thereto,
(C) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or of the suspension
by any state securities commission of the qualification of the Registrable
Securities for offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes, (D) of the existence of any fact
or the happening of any event that makes any statement of a material fact made
in the Registration Statement, the Prospectus, any amendment or supplement
thereto or any document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the Registration Statement
in order to make the statements therein not misleading, or that requires the
making of any additions to or changes in the Prospectus in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the Registrable
Securities under state securities or Blue Sky laws, Holdings shall use its best
efforts to obtain the withdrawal or lifting of such order at the earliest
possible time;
(4) make available to each Selling Holder named in any Registration
Statement or Prospectus and each of the underwriter(s) in connection with such
sale, if any, before filing with the Commission, copies of any Registration
Statement or any Prospectus included therein or any amendments or supplements to
any such Registration Statement or Prospectus and Holdings will not file or will
correct any such Registration Statement or Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus (including all such
documents incorporated by reference) to which the Selling Holders of the
Registrable Securities covered by such Registration Statement or the
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underwriter(s) in connection with such sale, if any, shall reasonably object
within five Business Days after the receipt thereof. A Selling Holder or
underwriter, if any, shall be deemed to have reasonably objected to such filing
if such Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed, contains a material misstatement or
omission or fails to comply with the applicable requirements of the Act;
(5) promptly upon the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus, make
available copies of such document to the Selling Holders and to the
underwriter(s) in connection with such sale, if any, make Holdings'
representatives available for discussion of such document and other customary
due diligence matters, and include such information in such document prior to
the filing thereof as such Selling Holders or underwriter(s), if any, reasonably
may request;
(6) make available for inspection by a representative of the Holders
of Registrable Securities being sold, any underwriter participating in any such
disposition of Registrable Securities, if any, and any attorney or accountant
retained by such representative of the Holders or underwriter (collectively, the
"INSPECTORS"), at the offices where normally kept, during reasonable business
hours, at the Inspector's expense, all financial and other records, pertinent
corporate documents and properties of Holdings and the subsidiaries of Holdings,
and cause the officers, directors and employees of Holdings and the subsidiaries
of Holdings to supply all information in each case reasonably requested by any
such Inspector in connection with such Registration Statement; provided,
however, that (i) in connection with any such inspection, any such Inspectors
shall cooperate to the extent reasonably practicable to minimize any disruption
to the operation by Holdings of its business and (ii) any records, information
or documents shall be kept confidential by such Inspectors, unless (A) such
records, information or documents are in the public domain or otherwise publicly
available or (B) disclosure of such records, information or documents is
required by a court or administrative order or by applicable law and notice of
such requirement is promptly given to Holdings after being received;
(7) if requested by any Selling Holders or the underwriter(s) in
connection with such sale, if any, promptly include in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as such Selling Holders and underwriter(s), if any,
may reasonably request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Registrable
Securities, information with respect to the principal amount of Registrable
Securities being sold to such underwriter(s), the purchase price being paid
therefor and any other terms of the offering of the Registrable Securities to be
sold in such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after Holdings is
notified of the matters to be included in such Prospectus supplement or post-
effective amendment;
(8) furnish to each Holder and each of the underwriter(s) in
connection with a sale of Warrant Shares, if any, without charge, at least one
copy of the Registration Statement, as first filed with the Commission, and of
each amendment thereto, and make available all documents incorporated by
reference therein and all exhibits (including exhibits incorporated therein by
reference);
(9) deliver to each Selling Holder and each of the underwriter(s), if
any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such Persons
reasonably may request; Holdings hereby consents to the use of the Prospectus
and any amendment or supplement thereto by each of the Selling Holders and each
of the
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underwriter(s), if any, in connection with the offering and the sale of the
Registrable Securities covered by the Prospectus or any amendment or supplement
thereto;
(10) enter into such agreements (including, unless not required
pursuant to Section 3 hereof, an underwriting agreement) and make such
representations and warranties and take all such other actions in connection
therewith that are reasonably necessary in order to expedite or facilitate the
disposition of the Registrable Securities pursuant to any Registration Statement
contemplated by this Agreement as may be reasonably requested by any Holder of
Registrable Securities or underwriter in connection with any exercise, sale or
resale pursuant to any Registration Statement contemplated by this Agreement,
and in such connection, whether or not an underwriting agreement is entered into
and whether or not the registration is an underwritten registration, Holdings
shall:
(A) furnish to each Selling Holder and each underwriter, if any,
upon the effectiveness of the Registration Statement:
(i) a certificate, dated the date of effectiveness of the
Registration Statement, signed by (x) the President and (y) any Vice
President, the Secretary or an Assistant Secretary of Holdings,
confirming, as of the date thereof, the matters of the types set forth
in paragraphs (a), (b), (c) and (d) of Section 8 of the Purchase
Agreement and such other matters as the Holders and/or underwriter(s)
may reasonably request;
(ii) an opinion (which may be rendered by the general
counsel of Holdings, except in the case of an underwritten offering),
dated the date of effectiveness of the Registration Statement, of
counsel for Holdings, covering (i) due authorization and
enforceability of the Warrants, (ii) a statement to the effect that
such counsel has participated in conferences with officers and other
representatives of Holdings and representatives of the independent
public accountants for Holdings and have considered the matters
required to be stated therein and the statements contained therein,
although such counsel has not independently verified the accuracy,
completeness or fairness of such statements; and that such counsel
advises that, on the basis of the foregoing (relying as to materiality
to a large extent upon facts provided to such counsel by officers and
other representatives of Holdings and without independent check or
verification), no facts came to such counsel's attention that caused
such counsel to believe that the applicable Registration Statement, at
the time such Registration Statement or any post-effective amendment
thereto became effective, and contained an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or that the Prospectus contained in such Registration
Statement as of its date and, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading and (iii) such other
matters of the type customarily covered in opinions of counsel for an
issuer in connection with similar securities offerings, as may
reasonably be requested by such parties. Without limiting the
foregoing, such counsel may state further that such counsel assumes no
responsibility for, and has not independently verified, the accuracy,
completeness or fairness of the financial statements, notes and
schedules and other financial, statistical and accounting data
included in any Registration Statement contemplated by this Agreement
or the related Prospectus; and
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(iii) a customary comfort letter, dated as of the date of
effectiveness of the Registration Statement, from Holdings'
independent accountants, in the customary form and covering matters of
the type customarily covered in comfort letters to underwriters in
connection with primary underwritten offerings, and affirming the
matters set forth in the comfort letters delivered pursuant to Section
8(i) of the Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, in connection with any sale or resale
pursuant to any Registration Statement the indemnification provisions and
procedures of Section 9 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with clause (A)
above and with any customary conditions contained in the underwriting
agreement or other agreement entered into by Holdings pursuant to this
clause (10), if any.
The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent required thereunder, and if at any time
the representations and warranties of Holdings contemplated in (A)(i) above
cease to be true and correct, Holdings shall so advise the underwriter(s), if
any, and Selling Holders promptly and if requested by such Persons, shall
confirm such advice in writing;
(11) prior to any public offering of Registrable Securities, cooperate
with the Holders, the underwriter(s), if any, and their respective counsel in
connection with the registration and qualification of the Registrable Securities
under the securities or Blue Sky laws of such jurisdictions as the Holders or
underwriter(s), if any, may request and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by the applicable Registration Statement;
provided, however, that where Registrable Securities are offered other than
through an underwritten offering, Holdings agrees to cause its counsel to
perform Blue Sky investigations and file registrations and qualifications
required to be filed pursuant to this Section 5(a)(11), keep each such
registration or qualification (or exemption therefrom) effective during the
period that the applicable Registration Statement is required to remain
effective under the terms of this Agreement and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the securities covered thereby; provided that Holdings shall not be required to
register or qualify as a foreign corporation where it is not now so qualified or
to take any action that would subject it to the service of process in suits or
to taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so subject;
(12) in connection with any sale or exercise of Registrable Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders and the underwriter(s), if any, to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends; and
to register such Registrable Securities in such denominations and such names as
the Holders or the underwriter(s), if any, may request at least two Business
Days prior to such sale of Registrable Securities;
(13) use its best efforts to cause the Registrable Securities covered
by the Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the Holder or
Holders thereof or the underwriter(s), if any, to
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consummate the exercise or disposition of such Registrable Securities, subject
to the proviso contained in clause (11) above;
(14) if any fact or event contemplated by clause (3) above shall exist
or have occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of Registrable Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(15) provide a CUSIP number for all Registrable Securities not later
than the effective date of a Registration Statement covering such Registrable
Securities and provide the Trustee under the Indenture with printed certificates
for the Registrable Securities which are in a form eligible for deposit with the
Depository Trust Company;
(16) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is required
to be retained in accordance with the rules and regulations of the NASD, and use
its best efforts to cause such Registration Statement to become effective and
approved by such governmental agencies or authorities as may be necessary to
enable the Holders selling Registrable Securities to consummate the disposition
of such Registrable Securities in accordance with the plan of distribution set
forth in such Registration Statement;
(17) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to its
security holders with regard to any applicable Registration Statement, as soon
as practicable, a consolidated earnings statement meeting the requirements of
Rule 158 (which need not be audited) covering a twelve-month period beginning
after the effective date of the Registration Statement (as such term is defined
in paragraph (c) of Rule 158 under the Act);
(18) cause all Registrable Securities covered by the Registration
Statement to be listed on each securities exchange or interdealer quotation
system on which similar securities issued by Holdings are then listed;
(19) provide promptly to each Holder upon written request each
document filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act;
(20) cooperate with the Holders of Registrable Securities and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold, which certificates shall not bear any restrictive legends whatsoever
and shall be in a form eligible for deposit with The Depository Trust Company
("DTC"); and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriter or underwriters, if any, or
Holders may reasonably request at least two business days prior to any sale of
Registrable Securities in a firm commitment underwritten public offering;
(21) pay all Registration Expenses in connection with the
registrations requested pursuant to Section 3 hereof. Each Holder of
Registrable Securities shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to a Registration Statement requested pursuant
to Section 3(2);
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(22) make appropriate officers of Holdings available to the Selling
Holders for meetings with prospective purchasers of the Registrable Securities
and prepare and present to potential investors customary "road show" material in
a manner consistent with other new issuances of other securities similar to the
Registrable Securities, in connection with any proposed sale of the Securities
in an aggregate offering of at least $10.0 million; and
(23) cooperate with the Selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends and
registered in such names as the Selling Holders may reasonably request at least
two business days prior to the closing of any sale of Registrable Securities.
(b) Restrictions on Holders. Each Holder agrees by acquisition of a
-----------------------
Registrable Security that, upon receipt of any notice from Holdings of the
existence of any fact of the kind described in Section 7(a)(3)(D) hereof, such
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the applicable Registration Statement until such Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section
7(a)(14) hereof, or until it is advised in writing (the "ADVICE") by Holdings
that the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated by reference in the
Prospectus. If so directed by Holdings, each Holder will deliver to Holdings(at
Holdings' expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Registrable Securities that
was current at the time of receipt of such notice. In the event Holdings shall
give any such notice, the time period regarding the effectiveness of such
Registration Statement set forth in Section 3 hereof, as applicable, shall be
extended by the number of days during the period from and including the date of
the giving of such notice pursuant to Section 7(a)(3)(D) hereof to and including
the date when each Selling Holder covered by such Registration Statement shall
have received the copies of the supplemented or amended Prospectus contemplated
by Section 7(a)(14) hereof or shall have received the Advice.
SECTION 8. REGISTRATION EXPENSES
(a) All expenses incident to Holdings' performance of or compliance
with this Agreement ("REGISTRATION EXPENSES") will be borne by Holdings,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses (including
filings made by any Holder with the NASD (and, if applicable, the reasonable
fees and expenses of any "qualified independent underwriter") and such Holder's
counsel, as may be required by the rules and regulations of the NASD); (ii) all
fees and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including, without limitation,
expenses of printing or engraving certificates for the Registrable Securities in
a form eligible for deposit with the Depository Trust Company and printing of
Prospectuses), messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for Holdings and, subject to Section 9(b) below, the
reasonable fees and disbursements of counsel to the Holders of Transfer
Restricted Securities; (v) all application and filing fees in connection with
listing the Registrable Securities on a national exchange or automated quotation
system pursuant to the requirements hereof; and (vi) all fees and disbursements
of independent certified public accountants of Holdings (including the expenses
of any special audit and comfort letters required by or incident to such
performance).
Holdings will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses
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of any annual audit and the fees and expenses of any Person, including special
experts, retained by Holdings.
(b) In connection with each Registration Statement required hereunder,
Holdings will reimburse the Holders of Registrable Securities being registered
pursuant to such Registration Statement for the reasonable fees and actual
disbursements of not more than one counsel chosen by the Holders of a majority
of the principal amount of such Registrable Securities, or more than one, if, in
the reasonable judgment of counsel for the Holders and counsel for Holdings, a
conflict exists among such Holders. Notwithstanding the provisions of this
Section 8, each Holder of Registrable Securities shall pay all registration
expenses to the extent required by applicable law.
SECTION 9. INDEMNIFICATION
(a) Holdings agrees to indemnify and hold harmless (i) each Holder and
(ii) each person, if any, who controls (within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act) any Holder (any of the persons referred
to in this clause (ii) being hereinafter referred to as a "controlling person")
and (iii) the respective officers, directors, partners, employees,
representatives and agents of any Holder or any controlling person (any person
referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an
"INDEMNIFIED HOLDER"), from and against any and all losses, claims, damages,
liabilities, judgments, (including without limitation, any legal or other
expenses incurred in connection with investigating or defending any matter,
including any action that could give rise to any such losses, claims, damages,
liabilities or judgments) (collectively, "LOSSES") caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, preliminary prospectus or Prospectus (or any amendment
or supplement thereto) provided by Holdings to any holder or any prospective
purchaser of Warrants or Warrant Shares, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
Losses are caused by an untrue statement or omission or alleged untrue statement
or omission that is based upon information relating to any of the Holders
furnished in writing to Holdings by any of the Holders. Notwithstanding the
foregoing, Holdings shall not be liable in any such case to the extent that any
such Loss arises out of, or is based upon, an untrue statement or alleged untrue
statement or omission or alleged omission made in any preliminary prospectus if
(i) the Selling Holder failed to send or deliver a copy of the Prospectus with
or prior to the delivery of written confirmation of the sale of Warrant Shares
to the person asserting such Loss or who purchased such Warrant Shares which are
the subject thereof and (ii) the Prospectus would have corrected such untrue
statement or omission or alleged untrue statement or alleged omission.
(b) Each Holder of Transfer Restricted Securities agrees, severally
and not jointly, to indemnify and hold harmless Holdings, and its directors and
officers, and each person, if any, who controls (within the meaning of Section
15 of the Act or Section 20 of the Exchange Act) Holdings to the same extent as
the foregoing indemnity from Holdings to each of the Indemnified Holders, but
only with reference to information relating to such Indemnified Holder furnished
in writing to Holdings by such Indemnified Holder expressly for use in any
Registration Statement. In no event shall any Indemnified Holder be liable or
responsible for any amount in excess of the amount by which the total amount
received by such Indemnified Holder with respect to its sale of Transfer
Restricted Securities pursuant to a Registration Statement exceeds (i) the
amount paid by such Indemnified Holder for such Transfer Restricted Securities
and (ii) the amount of any damages that such Indemnified Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.
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(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 9(a) or 9(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PERSON") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 9(a) and 9(b), an Indemnified Holder shall not be required to
assume the defense of such action pursuant to this Section 9(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Indemnified Holder). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised in writing by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all indemnified parties and all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by a majority of the Indemnified Holders, in the case of
the parties indemnified pursuant to Section 9(a), and by Holdings, in the case
of parties indemnified pursuant to Section 9(b). The indemnifying party shall
indemnify and hold harmless the indemnified party from and against any and all
losses, claims, damages, liabilities and judgments by reason of any settlement
of any action (i) effected with its written consent or (ii) effected without its
written consent if the settlement is entered into more than twenty business days
after the indemnifying party shall have received a request from the indemnified
party for reimbursement for the fees and expenses of counsel (in any case where
such fees and expenses are at the expense of the indemnifying party) and, prior
to the date of such settlement, the indemnifying party shall have failed to
comply with such reimbursement request. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement or
compromise of, or consent to the entry of judgment with respect to, any pending
or threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this
Section 9 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments (i) in such proportion
as is appropriate to reflect the relative benefits received by Holdings, on the
one hand, and the Holders, on the other hand, from their sale of Transfer
Restricted Securities or (ii) if the allocation provided by clause 9(d)(i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause 9(d)(i)
13
<PAGE>
above but also the relative fault of Holdings, on the one hand, and of the
Indemnified Holder, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
fault of Holdings, on the one hand, and of the Indemnified Holder, on the other
hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by Holdings,
on the one hand, or by the Indemnified Holder, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and judgments
referred to above shall be deemed to include, subject to the limitations set
forth in the second paragraph of Section 9(a), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
Holdings and each Holder agree that it would not be just and equitable
if contribution pursuant to this Section 9(d) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any matter, including any action
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 9, no Holder or its
related Indemnified Holders shall be required to contribute, in the aggregate,
any amount in excess of the amount by which the total received by such Holder
with respect to the sale of its Transfer Restricted Securities pursuant to a
Registration Statement exceeds the sum of (A) the amount paid by such Holder for
such Transfer Restricted Securities plus (B) the amount of any damages which
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute pursuant
to this Section 7(d) are several in proportion to amount of Transfer Restricted
Securities held by each of the Holders hereunder and not joint.
SECTION 10. RULE 144A
Holdings hereby agrees with each Holder, for so long as any
Registrable Securities remain outstanding, to make available, upon request of
any Holder of Registrable Securities, to any Holder or beneficial owner of
Registrable Securities in connection with any sale thereof and any prospective
purchaser of such Registrable Securities designated by such Holder or beneficial
owner, the information required by Rule 144A(d)(4) under the Act in order to
permit resales of such Registrable Securities pursuant to Rule 144A.
SECTION 11. MISCELLANEOUS
(a) Remedies. Each Holder of Registrable Securities, in addition to
---------
being entitled to exercise all rights provided herein, and as provided in the
Purchase Agreement and the Warrant Agreement and granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. Holdings agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and,
14
<PAGE>
to the extent not prohibited by applicable law, hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
(b) No Inconsistent Agreements. Holdings will not on or after the
---------------------------
date of this Agreement enter into any agreement with respect to its securities
that conflicts with the rights granted to the Holders of Registrable Securities
in this Agreement or otherwise conflicts with the provisions hereof. Except as
disclosed in the Offering Memorandum, Holdings has not previously entered into
any agreement granting any registration rights of its securities to any Person
except the Debt Registration Rights Agreement regarding the Senior Notes
executed concurrently herewith. The rights granted to the Holders of
Registrable Securities hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of Holdings' securities
under any other agreement in effect on the date hereof, except where a waiver
with respect thereto has been obtained prior to the date of effectiveness of any
Registration Statement required under this Agreement.
(c) Adjustments Affecting the Registrable Securities. Holdings will
-------------------------------------------------
not take any action, or permit any change to occur, with respect to the
Registrable Securities which would (i) adversely affect the ability of any of
the Holders of Registrable Securities to include such Registrable Securities in
a registration undertaken pursuant to this Agreement or (ii) materially
adversely affect the marketability of the Registrable Securities in any such
registration.
(d) Amendments and Waivers. The provisions of this Agreement,
-----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless Holdings has obtained the written consent of Holders of
a majority of the outstanding Registrable Securities; provided, however, that
Section 9 and Section 11(d) may not be amended, modified or supplemented without
the written consent of each Holder (including any Person who was a Holder of
Registrable Securities disposed of pursuant to any Registration Statement)
affected by any such amendment, modification or supplement. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders of Registrable Securities whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other Holders of Registrable
Securities may be given by the Holders of at least a majority of the Registrable
Securities being sold.
(e) Notices. All notices and other communications provided for or
--------
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(1) if to a Holder, at the address set forth on the records of
the Warrant Agent under the Warrant Agreement, with a copy to the Warrant
Agent under the Warrant Agreement; and
15
<PAGE>
(2) if to Holdings:
American Mobile Satellite Corporation
10802 Parkridge Blvd.
Reston, Virginia 20191-5416
Telecopier No.: (703) 758-6134
Attention: Randy S. Segal
With a copy to (which shall not constitute notice):
Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004-1202
Telecopier No.: (202) 942-5999
Attention: Richard E. Baltz
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit
-----------------------
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Registrable Securities.
(g) Counterparts. This Agreement may be executed in any number of
-------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
---------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
--------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF. Holdings hereby irrevocably and unconditionally:
(i) submits itself and its property in any legal action or proceeding relating
to this Warrant Registration Rights Agreement or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive jurisdiction of the
courts of the State of New York and the courts of the United States of America
for the Southern District of New York, and appellate courts thereof, and
consents and agrees to such action or proceeding being brought in such courts;
and (ii) waives any objection that it may now or hereafter have to the venue of
any such action or proceeding in any such court or that such action or
proceeding was brought in any inconvenient court and agrees not to plead or
claim the same.
(j) Severability. In the event that any one or more of the provisions
-------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the
16
<PAGE>
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be affected
or impaired thereby.
(k) Entire Agreement. This Agreement together with the other
-----------------
Operative Documents (as defined in the Purchase Agreement) is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by Holdings with respect
to the securities sold pursuant to the Purchase Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
(l) Securities Held by Holdings or Its Affiliates. Whenever the
---------------------------------------------
consent or approval of Holders of a specified percentage of Registrable
Securities or Warrants is required thereunder, Registrable Securities or
Warrants held by Holdings or by any of its affiliates (as such term is defined
in Rule 405 under the Securities Act) shall not be counted (in either the
numerator or the denominator) in determining whether such consent or approval
was given by the Holders of such required percentage.
[signature page follows]
17
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
AMERICAN MOBILE SATELLITE CORPORATION
By:
-------------------------
Name:
Title:
BEAR, STEARNS & CO. INC.
By:
-------------------------
Name:
Title:
J.P. MORGAN SECURITIES INC.
By:
-------------------------
Name:
Title:
TD SECURITIES (USA) INC.
By:
-------------------------
Name:
Title:
BANCAMERICA ROBERTSON STEPHENS
By:
-------------------------
Name:
Title:
Warrant Registration Rights signature page(s) - 1
<PAGE>
Exhibit 4.6
================================================================================
UNIT AGREEMENT
Among
AMERICAN MOBILE SATELLITE CORPORATION
(a Delaware corporation)
AMSC ACQUISITION COMPANY, INC.
(a Delaware corporation)
and
STATE STREET BANK AND TRUST COMPANY
as Unit Agent
---------------------------------------
March 31, 1998
---------------------------------------
================================================================================
<PAGE>
UNIT AGREEMENT dated as of March 31, 1998 among American Mobile
Satellite Corporation ("HOLDINGS"), AMSC Acquisition Company, Inc. (the
"COMPANY"), and State Street Bank and Trust Company, as Unit Agent, Warrant
Agent and Trustee.
WHEREAS, the Company proposes to issue $335,000,000 aggregate
principal amount of its 12 1/4% Senior Notes due 2008 (the "NOTES") pursuant to
an Indenture dated as of March 31, 1998 (the "INDENTURE") among the Company, the
Guarantors (as defined in the Indenture) and State Street Bank and Trust Company
as Trustee (the "TRUSTEE"), and Holdings proposes to issue 335,000 warrants (the
"WARRANTS"), each Warrant entitling the holder thereof to purchase initially
3.75749 shares of its Common Stock, par value $.01 per share (the "COMMON
STOCK"). The Notes and the Warrants will initially be represented by units (the
"UNITS"), with each Unit consisting of $1,000 principal amount of Notes and one
Warrant of Holdings. State Street Bank and Trust Company has agreed with
Holdings to act as warrant agent for the Warrants (the "WARRANT AGENT").
WHEREAS, Holdings, the Company, the Trustee and the Warrant Agent
desire to appoint State Street Bank and Trust Company to act as their agent for
the purpose of issuing certificates ("UNIT CERTIFICATES") representing the Units
and for the registration of transfers and exchanges thereof. State Street Bank
and Trust Company, in such capacity, is referred to herein as the "UNIT AGENT."
WHEREAS, the Units will be exchangeable for the Notes and the Warrants
represented thereby upon the earliest to occur of: (i) 180 days after the date
of original issuance of the Units, (ii) such date as may be determined by Bear,
Stearns Co. Inc., (iii) in the event a Change of Control (as defined in the
Indenture) occurs, the date that the Company mails notice thereof to holders of
the Notes (iv) the commencement of the Exchange Offer and (v) the effectiveness
of the shelf registration statement relating to the Notes. The date on which an
event listed in the preceding sentence occurs is referred to as the "SEPARATION
DATE."
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. Appointment of Unit Agent.
-------------------------
(a) Holdings and the Company hereby appoints the Unit Agent to act as
agent for Holdings and the Company in accordance with and subject to the terms
and conditions set forth in this Agreement, and the Unit Agent hereby accepts
such appointment.
(b) The Trustee and the Company hereby appoint the Unit Agent as
Authenticating Agent and Registrar (as such terms are defined in the Indenture)
for the Notes for so long as the Notes are represented by the Units. In its
capacity as Authenticating Agent and Registrar, the Unit Agent shall have the
rights and obligations provided for such capacities in the Indenture.
(c) The Warrant Agent and Holdings hereby appoint the Unit Agent as
Authenticating Agent and Registrar (as such terms are defined in the Warrant
Agreement) for the Warrants for so long as the Warrants are represented by the
Units. In its capacity as Warrant Authenticating Agent and Warrant Registrar,
the Unit Agent shall have the rights and obligations provided for such
capacities in the Warrant Agreement.
Section 2. Definitions.
-----------
1
<PAGE>
"144A GLOBAL UNIT" means a global unit in the form of Exhibit A1
hereto bearing the Global Unit Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
number of the Units sold in reliance on Rule 144A.
"APPLICABLE PROCEDURES" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Unit, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"CEDEL" means Cedel Bank, SA.
"DEFINITIVE UNIT" means a certificated Unit registered in the name of
the Holder thereof and issued in accordance with Section 3.6 hereof, in the form
of Exhibit A1 hereto except that such Unit shall not bear the Global Unit Legend
and shall not have the "Schedule of Exchanges of Interests in the Global Unit"
attached thereto.
"DEPOSITARY" means, with respect to the Units issuable or issued in
whole or in part in global form, the Person specified in Section 3.3 hereof as
the Depositary with respect to the Units, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"EUROCLEAR" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"GLOBAL UNITS" means, individually and collectively, each of the
Restricted Global Units, in the form of Exhibits A1 and A2 hereto issued in
accordance with Section 3.1 hereof.
"GLOBAL UNIT LEGEND" means the legend set forth in Section 3.6(f)(ii),
which is required to be placed on all Global Units issued under this Unit
Agreement.
"IAI GLOBAL UNIT" means the global unit in the form of Exhibit A1
hereto bearing the Global Unit Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
number of the Units sold to Institutional Accredited Investors.
"INDIRECT PARTICIPANT" means a Person who holds a beneficial interest
in a Global Unit through a Participant.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"NON-U.S. PERSON" means a Person who is not a U.S. Person.
"OFFICER" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of
Holdings and the Company by two Officers of Holdings and the Company, one of
whom must be the principal executive
2
<PAGE>
officer, the principal financial officer, the treasurer or the principal
accounting officer of Holdings and the Company, that meets the requirements of
Section 13.04 and Section 13.05 of the Indenture.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Unit Agent, that meets the requirements of Section
13.04 and Section 13.05 of the Indenture. The counsel may be an employee of or
counsel to Holdings and the Company, any Subsidiary of Holdings and the Company
or the Unit Agent.
"PARTICIPANT" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"PRIVATE PLACEMENT LEGEND" means the legend set forth in Section
3.6(f)(i) to be placed on all Units issued under this Unit Agreement except
where otherwise permitted by the provisions of this Unit Agreement.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"REGULATION S" means Regulation S promulgated under the Securities
Act.
"REGULATION S GLOBAL UNIT" means a Regulation S Temporary Global Unit
or Regulation S Permanent Global Unit, as appropriate.
"REGULATION S PERMANENT GLOBAL UNIT" means a permanent global unit in
the form of Exhibit A1 hereto bearing the Global Unit Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the number
of the Regulation S Temporary Global Units upon expiration of the Restricted
Period.
"REGULATION S TEMPORARY GLOBAL UNIT" means a temporary global unit in
the form of Exhibit A2 hereto bearing the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its
nominee, issued in a denomination equal to the outstanding number of Units
initially sold in reliance on Rule 903 of Regulation S.
"RESTRICTED DEFINITIVE UNIT" means a Definitive Unit bearing the
Private Placement Legend.
"RESTRICTED GLOBAL UNIT" means a Global Unit bearing the Private
Placement Legend.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"RULE 903" means Rule 903 promulgated under the Securities Act.
"RULE 904" means Rule 904 promulgated under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"U.S. PERSON" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
3
<PAGE>
Section 3. Units.
-----
Section 3.1. Form and Dating.
---------------
(a) General.
The Units and the Unit Agent's certificate of authentication shall be
substantially in the form of Exhibits A1 and A2 hereto. The Units may have
notations, legends or endorsements required by law, stock exchange rule or
usage.
The terms and provisions contained in the Units shall constitute, and
are hereby expressly made, a part of this Unit Agreement and the Company, the
Guarantors and the Unit Agent, by their execution and delivery of this Unit
Agreement, expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Unit conflicts with the express
provisions of this Unit Agreement, the provisions of this Unit Agreement shall
govern and be controlling.
(b) Global Units.
Units issued in global form shall be substantially in the form of
Exhibits A1 or A2 attached hereto (including the Global Units Legend thereon and
the "Schedule of Exchanges of Interests in the Global Unit" attached thereto).
Units issued in definitive form shall be substantially in the form of Exhibit A1
attached hereto (but without the Global Unit Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Unit" attached thereto). Each
Global Unit shall represent such of the outstanding Units as shall be specified
therein and each shall provide that it shall represent the outstanding Units
from time to time endorsed thereon and that the outstanding Units represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Unit to reflect
the amount of any increase or decrease in the aggregate amount of outstanding
Units represented thereby shall be made by the Unit Agent or the Unit Custodian,
at the direction of the Unit Agent, in accordance with instructions given by the
Holder thereof as required by Section 3.6 hereof.
(c) Temporary Global Units.
Units offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Unit, which shall be
deposited on behalf of the purchasers of the Units represented thereby with the
Unit Agent, at its New York office, as custodian for the Depositary, and
registered in the name of the Depositary or the nominee of the Depositary for
the accounts of designated agents holding on behalf of Euroclear or Cedel Bank,
duly executed by Holdings and the Company and authenticated by the Unit Agent as
hereinafter provided. The Restricted Period shall be terminated upon the
receipt by the Unit Agent of (i) a written certificate from the Depositary,
together with copies of certificates from Euroclear and Cedel Bank certifying
that they have received certification of non-U.S. beneficial ownership of 100%
of the Regulation S Temporary Global Unit (except to the extent of any
beneficial owners thereof who acquired an interest therein during the Restricted
Period pursuant to another exemption from registration under the Securities Act
and who will take delivery of a beneficial ownership interest in a 144A Global
Unit or an IAI Global Unit bearing a Private Placement Legend, all as
contemplated by Section 3.6(g)(i) hereof), and (ii) an Officers' Certificate
from Holdings and the Company. Following the termination of the Restricted
Period, beneficial interests in the Regulation S Temporary Global Unit shall be
exchanged for beneficial interests in Regulation S Permanent Global Units
pursuant to the Applicable Procedures. Simultaneously with the authentication
4
<PAGE>
of Regulation S Permanent Global Units, the Unit Agent shall cancel the
Regulation S Temporary Global Unit. The aggregate number of the Regulation S
Temporary Global Unit and the Regulation S Permanent Global Units may from time
to time be increased or decreased by adjustments made on the records of the Unit
Agent and the Depositary or its nominee, as the case may be, in connection with
transfers of interest as hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in the Regulation S Temporary
Global Unit and the Regulation S Permanent Global Units that are held by
Participants through Euroclear or Cedel Bank.
Section 3.2. Execution and Authentication.
----------------------------
Two Officers shall sign the Units for each of Holdings and the Company
by manual or facsimile signature.
If an Officer whose signature is on a Unit no longer holds that office
at the time a Unit is authenticated, the Unit shall nevertheless be valid.
A Unit shall not be valid until authenticated by the manual signature
of the Unit Agent. The signature shall be conclusive evidence that the Unit has
been authenticated under this Unit Agreement.
The Unit Agent shall, upon a written order of each of Holdings and the
Company signed by two Officers (a "UNIT AUTHENTICATION ORDER"), authenticate
Units for original issue up to the number stated in the Units. The aggregate
number of Units outstanding at any time may not exceed such amount except as
provided in Section 3.7 hereof.
The Unit Agent may appoint an authenticating agent acceptable to
Holdings and the Company to authenticate Units. An authenticating agent may
authenticate Units whenever the Unit Agent may do so. Each reference in this
Unit Agreement to authentication by the Unit Agent includes authentication by
such agent. An authenticating agent has the same rights as an Agent to deal
with Holders or an Affiliate of Holdings or the Company.
Section 3.3. Unit Registrar and Unit Paying Agent.
------------------------------------
Holdings and the Company shall maintain an office or agency where
Units may be presented for registration of transfer or for exchange (the "UNIT
REGISTRAR") and an office or agency where Units may be presented for payment
(the "UNIT PAYING AGENT"). The Unit Registrar shall keep a register of the
Units and of their transfer and exchange. Holdings and the Company may appoint
one or more co-registrars and one or more additional paying agents. The term
"UNIT REGISTRAR" includes any co-registrar and the term "UNIT PAYING AGENT"
includes any additional paying agent. Holdings and the Company may change any
Unit Paying Agent or Unit Registrar without notice to any Holder. Holdings and
the Company shall notify the Unit Agent in writing of the name and address of
any Agent not a party to this Unit Agreement. If Holdings and the Company fail
to appoint or maintain another entity as Unit Registrar or Unit Paying Agent,
the Unit Agent shall act as such. Holdings and the Company or any of
5
<PAGE>
its Subsidiaries may act as Unit Paying Agent or Unit Registrar Holdings and the
Company initially appoints The Depository Trust Company ("DTC") to act as
Depositary with respect to the Global Units.
Holdings and the Company initially appoint the Unit Agent to act as
the Unit Registrar and Unit Paying Agent and to act as Unit Custodian with
respect to the Global Units.
Section 3.4. Unit Paying Agent to Hold Money in Trust.
----------------------------------------
Holdings and the Company shall require each Unit Paying Agent other
than the Unit Agent to agree in writing that the Unit Paying Agent will hold in
trust for the benefit of Holders or the Unit Agent all money held by the Unit
Paying Agent for the payment of principal, premium or Liquidated Damages, if
any, or interest on the Notes, or Liquidated Damages, if any, on the Warrants,
and will notify the Unit Agent of any default by Holdings or the Company in
making any such payment. While any such default continues, the Unit Agent may
require a Unit Paying Agent to pay all money held by it to the Unit Agent. The
Company at any time may require a Unit Paying Agent to pay all money held by it
to the Unit Agent. Upon payment over to the Unit Agent, the Unit Paying Agent
(if other than Holdings, the Company or a Subsidiary) shall have no further
liability for the money. If Holdings, the Company or a Subsidiary acts as Unit
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Unit Paying Agent. Upon any
bankruptcy or reorganization proceedings relating to Holdings or the Company,
the Unit Agent shall serve as Unit Paying Agent for the Units.
Section 3.5. Holder Lists.
------------
The Unit Agent shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA (S) 312(a). If the Unit Agent
is not the Registrar, Holdings and the Company shall furnish to the Unit Agent
at least seven Business Days before each interest payment date and at such other
times as the Unit Agent may request in writing, a list in such form and as of
such date as the Unit Agent may reasonably require of the names and addresses of
the Holders of Units and Holdings and the Company shall otherwise comply with
TIA (S) 312(a).
Section 3.6. Transfer and Exchange
---------------------
(a) Transfer and Exchange of Global Units.
A Global Unit may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. All Global Units will be exchanged by Holdings and the Company for
Definitive Units if (i) the Company delivers to the Trustee notice from the
Depositary that it is unwilling or unable to continue to act as Depositary or
that it is no longer a clearing agency registered under the Exchange Act and, in
either case, a successor Depositary is not appointed by Holdings and the Company
within 120 days after the date of such notice from the Depositary or (ii)
Holdings and the Company in its sole discretion determines that the Global Units
(in whole but not in part) should be exchanged for Definitive Units and delivers
a written notice to such effect to the Trustee; provided that in no event shall
the Regulation S Temporary Global Unit be exchanged by Holdings and the Company
for Definitive Units prior to (x) the expiration of the Restricted Period and
(y) the receipt by the Registrar of any certificates required pursuant to Rule
903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of the
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preceding events in (i) or (ii) above, Definitive Units shall be issued in such
names as the Depositary shall instruct the Unit Agent. Global Units also may be
exchanged or replaced, in whole or in part, as provided in Sections 3.7 and 3.9
hereof. Every Unit authenticated and delivered in exchange for, or in lieu of,
a Global Unit or any portion thereof, pursuant to this Section 3.6 or Section
3.7 or 3.9 hereof, shall be authenticated and delivered in the form of, and
shall be, a Global Unit. A Global Unit may not be exchanged for another Unit
other than as provided in this Section 3.6(a), however, beneficial interests in
a Global Unit may be transferred and exchanged as provided in Section 3.6(b) or
(c) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Units.
The transfer and exchange of beneficial interests in the Global Units
shall be effected through the Depositary, in accordance with the provisions of
this Unit Agreement and the Applicable Procedures. Beneficial interests in the
Restricted Global Units shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Units also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Unit.
Beneficial interests in any Restricted Global Unit may be transferred to Persons
who take delivery thereof in the form of a beneficial interest in the same
Restricted Global Unit in accordance with the transfer restrictions set forth in
the Private Placement Legend; provided, however, that prior to the expiration of
the Restricted Period, transfers of beneficial interests in the Temporary
Regulation S Global Unit may not be made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). No written orders
or instructions shall be required to be delivered to the Registrar to effect the
transfers described in this Section 3.6(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Units. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 3.6(b)(i) above, the transferor of
such beneficial interest must deliver to the Registrar either (A) (1) a written
order from a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to credit or
cause to be credited a beneficial interest in another Global Unit in an amount
equal to the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures containing
information regarding the Participant account to be credited with such increase
or (B) (1) a written order from a Participant or an Indirect Participant given
to the Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Unit in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions given by
the Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Unit shall be registered to effect the transfer or
exchange referred to in (1) above; provided that in no event shall Definitive
Units be issued upon the transfer or exchange of beneficial interests in the
Regulation S Temporary Global Unit prior to (x) the expiration of the Restricted
Period and (y) the receipt by the Registrar of any certificates required
pursuant to Rule 903 under the Securities Act. Upon consummation of an Exchange
Offer by the Company in accordance with the Indenture, hereof, the requirements
of this Section 3.6(b)(ii) shall be deemed to have been satisfied upon receipt
by the Registrar of the instructions contained in the Letter of Transmittal
delivered by the Holder of such beneficial interests in the Restricted Global
Units. Upon satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Units contained in this Unit Agreement and the
Units or otherwise applicable provisions under the Securities Act, the Unit
Agent shall adjust the number
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amount of the relevant Global Unit(s) pursuant to Section 3.6(g) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Unit. A beneficial interest in any Restricted Global Unit may be transferred to
a Person who takes delivery thereof in the form of a beneficial interest in
another Restricted Global Unit if the transfer complies with the requirements of
Section 3.6(b)(ii) above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Unit, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Unit or the
Regulation S Global Unit, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Unit, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications and certificates and Opinion of Counsel required by
item (3) thereof, if applicable.
(c) Transfer or Exchange of Beneficial Interests in Restricted Global
Units to Restricted Definitive Units.
If any holder of a beneficial interest in a Restricted Global Unit
proposes to exchange such beneficial interest for a Restricted Definitive Unit
or to transfer such beneficial interest to a Person who takes delivery thereof
in the form of a Restricted Definitive Unit, then, upon receipt by the Registrar
of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Unit proposes to exchange such beneficial interest
for a Restricted Definitive Unit, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in item
(1)(a) thereof;
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903
or Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional
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Accredited Investor in reliance on an exemption from the registration
requirements of the Securities Act other than those listed in
subparagraphs (B) through (D) above, a certificate to the effect set
forth in Exhibit B hereto, including the certifications, certificates
and Opinion of Counsel required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred to
Holdings, the Company or any of its Subsidiaries, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Unit Agent shall cause the aggregate number of the applicable Global
Unit to be reduced accordingly pursuant to Section 3.6(g) hereof, and
Holdings and the Company shall execute and, upon receipt of a Unit
Authentication Order, the Unit Agent shall authenticate and deliver to the
Person designated in the instructions a Definitive Unit in the appropriate
number. Any Definitive Unit issued in exchange for a beneficial interest
in a Restricted Global Unit pursuant to this Section 3.6(c) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Unit Registrar through instructions from the Depositary and the Participant
or Indirect Participant. The Unit Agent shall deliver such Definitive
Units to the Persons in whose names such Units are so registered. Any
Definitive Unit issued in exchange for a beneficial interest in a
Restricted Global Unit pursuant to this Section 3.6(c)(i) shall bear the
Private Placement Legend and shall be subject to all restrictions on
transfer contained therein.
Notwithstanding Sections 3.6(c)(i)(A) and (C) hereof, a beneficial
interest in the Regulation S Temporary Global Unit may not be exchanged for a
Definitive Unit or transferred to a Person who takes delivery thereof in the
form of a Definitive Unit prior to (x) the expiration of the Restricted Period
and (y) the receipt by the Registrar of any certificates required pursuant to
Rule 903(c)(3)(ii)(B) under the Securities Act, except in the case of a transfer
pursuant to an exemption from the registration requirements of the Securities
Act other than Rule 903 or Rule 904.
(d) Transfer and Exchange of Restricted Definitive Units to
Beneficial Interests in Restricted Global Units.
If any Holder of a Restricted Definitive Unit proposes to exchange
such Unit for a beneficial interest in a Restricted Global Unit or to transfer
such Restricted Definitive Units to a Person who takes delivery thereof in the
form of a beneficial interest in a Restricted Global Unit, then, upon receipt by
the Units Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Unit
proposes to exchange such Unit for a beneficial interest in a
Restricted Global Unit, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in item (1)(b) thereof;
(B) if such Restricted Definitive Unit is being transferred
to a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
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<PAGE>
(C) if such Restricted Definitive Unit is being transferred
to a Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (2) thereof;
(D) if such Restricted Definitive Unit is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Unit is being transferred
to an Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other than
those listed in subparagraphs (B) through (D) above, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item
(3) thereof, if applicable;
(F) if such Restricted Definitive Unit is being transferred
to Holdings, the Company or any of its Subsidiaries, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (3)(b) thereof; or
(G) if such Restricted Definitive Unit is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Unit Agent shall cancel the Restricted Definitive Unit, increase or
cause to be increased the number of, in the case of clause (A) above, the
appropriate Restricted Global Unit, in the case of clause (B) above, the
144A Global Unit, in the case of clause (c) above, the Regulation S Global
Unit, and in all other cases, the IAI Global Unit.
(e) Transfer and Exchange of Restricted Definitive Units to
Restricted Definitive Units.
Upon request by a Holder of Definitive Units and such Holder's
compliance with the provisions of this Section 3.6(e), the Registrar shall
register the transfer or exchange of Definitive Units. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Unit Registrar the Definitive Units duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Unit Registrar duly executed by such Holder or by his attorney, duly authorized
in writing. In addition, the requesting Holder shall provide any additional
certifications, documents and information, as applicable, required pursuant to
the following provisions of this Section 3.6(e).
Any Restricted Definitive Unit may be transferred to and registered in
the name of Persons who take delivery thereof in the form of a Restricted
Definitive Unit if the Unit Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under
the Securities Act, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications in item (1)
thereof;
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(B) if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act,
then the transferor must deliver a certificate in the form of Exhibit
B hereto, including the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable.
(f) Legends
The following legends shall appear on the face of all Global Units and
Definitive Units issued under this Unit Agreement unless specifically stated
otherwise in the applicable provisions of this Unit Agreement.
(i) Private Placement Legend.
Except as permitted by subparagraph (B) below, each Global
Unit and each Definitive Unit (and all Units issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION
IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO (A)
OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY ONLY (1) TO
HOLDINGS OR THE COMPANY, (2) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (3) TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (4) PURSUANT
TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF REGULATION
S UNDER THE SECURITIES ACT, (5) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT (AN "IAI") THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
UNIT AGENT, AND, IN THE CASE OF ANY TRANSFER TO ANY IAI OF SECURITIES WHICH
INCLUDE AN AGGREGATE PRINCIPAL AMOUNT OF $250,000 OR LESS OF NOTES, AN
OPINION OF COUNSEL IF HOLDINGS SO REQUESTS OR (6) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES
ACT (AND BASED ON AN OPINION OF COUNSEL IF HOLDINGS SO REQUESTS), SUBJECT
IN EACH OF THE FOREGOING CASES TO APPLICABLE SECURITIES LAWS OF
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ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THAT IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.
(ii) Global Unit Legend. Each Global Unit shall bear a legend
in substantially the following form:
THIS GLOBAL UNIT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE UNIT
AGREEMENT GOVERNING THIS UNIT) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF
THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER
ANY CIRCUMSTANCES EXCEPT THAT (I) THE UNIT AGENT MAY MAKE SUCH NOTATIONS
HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 3.7 OF THE UNIT AGREEMENT ,
(II) THIS GLOBAL UNIT MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO
SECTION 3.6(a) OF THE UNIT AGREEMENT, (III) THIS GLOBAL UNIT MAY BE
DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 3.11 OF THE
UNIT AGREEMENT AND (IV) THIS GLOBAL UNIT MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF HOLDINGS AND THE COMPANY.
(iii) Regulation S Temporary Global Unit Legend. The Regulation S
Temporary Global Unit shall bear a legend in substantially the following form:
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL UNIT, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED
UNITS, ARE AS SPECIFIED IN THE UNIT AGREEMENT NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL UNIT SHALL BE
ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
(g) Cancellation and/or Adjustment of Global Units.
At such time as all beneficial interests in a particular Global Unit
have been exchanged for Definitive Units or a particular Global Unit has been
redeemed, repurchased or canceled in whole and not in part, each such Global
Unit shall be returned to or retained and canceled by the Unit Agent in
accordance with Section 3.11 hereof. At any time prior to such cancellation, if
any beneficial interest in a Global Unit is exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest in
another Global Unit or for Definitive Units, the aggregate number of Units
represented by such Global Unit shall be reduced accordingly and an endorsement
shall be made on such Global Unit by the Unit Agent or by the Depositary at the
direction of the Unit Agent to reflect such reduction; and if the beneficial
interest is being exchanged for or transferred to a Person who will take
delivery thereof in the form of a beneficial interest in another Global Unit,
such other Global Unit shall be increased accordingly and an endorsement shall
be made on such Global Unit by the Unit Agent or by the Depositary at the
direction of the Unit Agent to reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges.
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(i) To permit registrations of transfers and exchanges, Holdings and
the Company shall execute and the Unit Agent shall authenticate Global Units and
Definitive Units upon Holdings and the Company's order or at the Unit
Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Unit or to a Holder of a Definitive Unit for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Section 3.10
hereof).
(iii) The Unit Registrar shall not be required to register the
transfer of or exchange any Unit selected for redemption in whole or in part,
except the unredeemed portion of any Unit being redeemed in part.
(iv) All Global Units and Definitive Units issued upon any
registration of transfer or exchange of Global Units or Definitive Units shall
be the valid obligations of Holdings and the Company, evidencing the same right
or debt and entitled to the same benefits under this Unit Agreement, as the
Global Units or Definitive Units surrendered upon such registration of transfer
or exchange.
(v) Prior to due presentment for the registration of a transfer of
any Unit, the Unit Agent, any Agent Holdings, and the Company may deem and treat
the Person in whose name any Unit is registered as the absolute owner of such
Unit for the purpose of receiving payment of principal of and interest and
Liquidated Damages, if any, on such Units and for all other purposes, and none
of the Unit Agent, any Agent, Holdings or the Company shall be affected by
notice to the contrary.
(vi) The Unit Agent shall authenticate Global Units and Definitive
Units in accordance with the provisions of Section 3.2 hereof.
(vii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 3.6 to effect
a registration of transfer or exchange may be submitted by facsimile.
Section 3.7. Replacement Units
-----------------
If any mutilated Unit is surrendered to the Unit Agent, Holdings or
the Company and the Unit Agent receives evidence to its satisfaction of the
destruction, loss or theft of any Unit, Holdings and the Company shall issue and
the Unit Agent, upon receipt of a Unit Authentication Order, shall authenticate
a replacement Unit if the Unit Agent's requirements are met. If required by the
Unit Agent, Holdings or the Company, an indemnity bond must be supplied by the
Holder that is sufficient in the judgment of the Unit Agent, Holdings and the
Company to protect Holdings and the Company, the Unit Agent, any Agent and any
authenticating agent from any loss that any of them may suffer if a Unit is
replaced. The Company may charge for its expenses in replacing a Unit.
Every replacement Unit is an additional obligation of the Company and
shall be entitled to all of the benefits of this Unit Agreement equally and
proportionately with all other Units duly issued hereunder.
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Section 3.8. Outstanding Units.
-----------------
The Units outstanding at any time are all the Units authenticated by
the Unit Agent except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Unit effected by the
Unit Agent in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 3.9 hereof, a Unit
does not cease to be outstanding because Holdings, the Company or an Affiliate
of the Company holds the Unit.
If a Unit is replaced pursuant to Section 3.6 hereof, it ceases to be
outstanding unless the Unit Agent receives proof satisfactory to it that the
replaced Unit is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 of the Indenture, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than Holdings, the Company, a Subsidiary or
an Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 3.9. Treasury Units.
--------------
In determining whether the Holders of the required amount of Units
have concurred in any direction, waiver or consent, Units owned by Holdings, the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with Holdings or the Company, shall be
considered as though not outstanding, except that for the purposes of
determining whether the Unit Agent shall be protected in relying on any such
direction, waiver or consent, only Units that the Unit Agent knows are so owned
shall be so disregarded.
Section 3.10. Temporary Units.
---------------
Until certificates representing Units are ready for delivery, Holdings
and the Company may prepare and the Unit Agent, upon receipt of a Unit
Authentication Order, shall authenticate temporary Units. Temporary Units shall
be substantially in the form of certificated Units but may have variations that
the Company considers appropriate for temporary Units and as shall be reasonably
acceptable to the Unit Agent. Without unreasonable delay, Holdings and the
Company shall prepare and, upon receipt of a Unit Authentication Order, the Unit
Agent shall authenticate Definitive Units in exchange for temporary Units.
Holders of temporary Units shall be entitled to all of the benefits of
this Unit Agreement.
Section 3.11. Cancellation.
------------
Holdings and the Company at any time may deliver Units to the Unit
Agent for cancellation. The Registrar and Paying Agent shall forward to the
Unit Agent any Units surrendered to them for registration of transfer, exchange
or payment. The Unit Agent and no one else shall cancel all Units surrendered
for registration of transfer, exchange, payment, replacement or cancellation and
shall destroy canceled Units (subject to the record retention requirement of the
Exchange Act). Certification of the destruction of all canceled Units shall be
delivered to Holdings and the Company. Holdings and
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the Company may not issue new Units to replace Units that it has paid or that
have been delivered to the Unit Agent for cancellation.
Section 4. Rights of Unit Holders. The registered owner of a Unit
----------------------
Certificate shall have all the rights and privileges of a registered owner of
the aggregate principal amount of Notes represented thereby and the number of
Warrants represented thereby and shall be treated as the registered owner
thereof for all purposes.
Section 5. Unit Agent. The Unit Agent undertakes the duties and
----------
obligations imposed by this Agreement upon the following terms and conditions,
by which Holdings, the Company and the holders of Units, by their acceptance
thereof, shall be bound:
(a) The statements contained herein and in the Unit Certificates
shall be taken as statements of Holdings and the Company, and the Unit Agent
assumes no responsibility for the correctness of any of the same except such as
describe the Unit Agent. The Unit Agent assumes no responsibility with respect
to the distribution of the Unit Certificates except as herein otherwise
specifically provided.
(b) The Unit Agent shall not be responsible for any failure of
Holdings or the Company to comply with any of the covenants in this Unit
Agreement, the Unit Certificates, the Warrant Agreement or the Indenture.
(c) The Unit Agent may consult at any time with counsel satisfactory
to it (who may be counsel for Holdings and the Company) and the Unit Agent shall
incur no liability or responsibility to Holdings or the Company or to any holder
of any Unit in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such counsel.
(d) The Unit Agent shall incur no liability or responsibility to
Holdings or the Company or to any holder of any Unit Certificate for any action
taken in reliance on any Unit Certificate, certificate of shares, notice,
resolution, waiver, consent, order, certificate, or other paper, document or
instrument believed by the Unit Agent to be genuine and to have been signed,
sent or presented by the proper party or parties.
(e) Holdings and the Company agrees to pay to the Unit Agent
compensation for all services rendered by the Unit Agent in connection with the
execution and performance of this Unit Agreement at such rates as have been
separately agreed to by the Company and the Unit Agent and to reimburse the Unit
Agent for all expenses, taxes and governmental charges and other charges of any
kind and nature incurred by the Unit Agent in the execution and performance of
this Unit Agreement. Holdings and the Company shall indemnify the Unit Agent
and its agents and save each of them harmless against any and all losses,
liabilities and expenses, including judgments, costs and counsel fees and the
costs and expenses of investigating or defending any claim of such liability,
for any action taken or omitted by the Unit Agent or its agents in the execution
of and performance of its obligations under this Unit Agreement except as a
result of its gross negligence or bad faith. The Unit Agent shall notify
Holdings and the Company promptly of any claim for which it may seek indemnity;
provided that failure by the Unit Agent to so notify Holdings and the Company
shall not relieve its obligations hereunder. Holdings and the Company shall
defend the claim and the Unit Agent shall cooperate in the defense. The Unit
Agent may have separate counsel and Holdings and the Company shall pay the
reasonable fees and expenses of such counsel. Holdings and the Company need not
pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.
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(f) The Unit Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless Holdings and the Company or one or more registered holders of
Unit Certificates shall furnish the Unit Agent with security and indemnity
reasonably satisfactory to it for any costs and expenses which may be incurred,
but this provision shall not affect the power of the Unit Agent to take such
action as it may consider proper, whether with or without any such security or
indemnity. All rights of action under this Unit Agreement or under any of the
Units may be enforced by the Unit Agent without the possession of any of the
Unit Certificates or the production thereof at any trial or other proceeding
relative thereto, and any such action, suit or proceeding instituted by the Unit
Agent shall be brought in its name as Unit Agent and any recovery of judgment
shall be for the ratable benefit of the registered holders of the Units, as
their respective rights or interests may appear.
(g) The Unit Agent, and any stockholder, director, officer or
employee of it, may buy, sell or deal in any of the Units or other securities of
Holdings and the Company or become pecuniarily interested in any transaction in
which Holdings and the Company may be interested, or contract with or lend money
to Holdings and the Company or otherwise act as fully and freely as though it
were not the Unit Agent under this Unit Agreement. Nothing herein shall
preclude the Unit Agent from acting in any other capacity for Holdings and the
Company or for any other legal entity.
(h) The Unit Agent shall act hereunder solely as agent for Holdings
and the Company, its duties shall be determined solely by the provisions hereof
and no implied covenants or obligations shall be read into this Unit Agreement
against the Unit Agent. The Unit Agent shall not be liable for anything which
it may do or refrain from doing in connection with this Unit Agreement except
for its own negligence or bad faith.
(i) In the absence of bad faith on its part, the Unit Agent may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the Unit
Agent and conforming to the requirements of this Unit Agreement. However, the
Unit Agent shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Unit Agreement.
(j) The Unit Agent may rely and shall be fully protected in relying
upon any document believed by it to be genuine and to have been signed or
presented by the proper person. The Unit Agent need not investigate any fact or
matter stated in the documents.
(k) The Unit Agent may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed and
monitored in good faith and with due care.
(l) Holdings and the Company will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged or delivered all such
further acts, instruments and assurances as may reasonably be required by the
Unit Agent in order to enable it to carry out or perform its duties under this
Unit Agreement.
Section 6. Change of Unit Agent. The Unit Agent may resign at any
--------------------
time by so notifying Holdings and the Company. If the Unit Agent shall resign or
become incapable of acting as Unit Agent, Holdings and the Company shall appoint
a successor to such Unit Agent. If Holdings and the Company shall fail to make
such appointment within a period of 30 days after it has been notified in
writing of such incapacity or resignation by the Unit Agent or by the registered
holder of a Unit Certificate, then the registered holder of any Unit Certificate
may apply to any court of competent
16
<PAGE>
jurisdiction for the appointment of a successor to the Unit Agent. Pending
appointment of a successor to such Unit Agent, either by Holdings and the
Company or by such a court, the duties of the Unit Agent shall be carried out by
Holdings and the Company. After appointment, the successor to the Unit Agent
shall be vested with the same powers, rights, duties and responsibilities as it
if had been originally named as Unit Agent without further act or deed; but the
former Unit Agent, after the payment of all outstanding amounts owed to it
hereunder, shall deliver and transfer to the successor to the Unit Agent any
property at the time held by it hereunder and execute and deliver any further
assurance, conveyance, act or deed necessary for such purpose. Failure to give
any notice provided for in this Section 6, however, or any defect therein, shall
not affect the legality or validity of the appointment of a successor to the
Unit Agent. The provisions of Section 5 with respect to any Unit Agent shall
survive such Unit Agents resignation or removal and the termination of this
Agreement.
Section 7. Successor Unit Agent by Merger, Etc. If the Unit Agent
-----------------------------------
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation, the resulting,
surviving or transferee corporation without any further act shall, if such
resulting, surviving or transferee corporation is otherwise eligible hereunder,
be the successor Unit Agent.
Section 8. Notices to Holdings, the Company and Unit Agent, Trustee
--------------------------------------------------------
and Transfer Agent. Any notice or demand authorized by this Agreement to be
- ------------------
given or made to or on Holdings and the Company shall be sufficiently given or
made when and if telecopied to the number indicated below or deposited in the
mail, first class or registered, postage paid, addressed (until another telecopy
number or address is filed in writing by Holdings and the Company with the Unit
Agent, the Trustee and the Warrant Agent), as follows:
American Mobile Satellite Corporation
10802 Parkridge Boulevard
Reston, Virginia 20191-5416
Facsimile No.: (703) 758-6134
Attention: General Counsel
With a copy to:
Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004-1202
Facsimile No.: (202) 942-5999
Attention: Richard E. Baltz
In case Holdings or the Company shall fail to maintain such office or
shall fail to give such notice of any change in the location thereof,
presentations may be made and notices and demands may be served at the principal
office of the Unit Agent.
Any notice pursuant to this Unit Agreement to be given by the Company
or by registered holder(s) of any Unit Certificate to the Unit Agent, the
Trustee or the Warrant Agent shall be sufficiently given when and if telecopied
to the number indicated below or deposited in the mail, first class or
registered, postage prepaid, addressed (until another telecopy number or address
is filed in writing by the Unit Agent, the Trustee and the Warrant Agent with
the Company), as follows:
17
<PAGE>
State Street Bank and Trust Company
Goodwin Square
225 Asylum Street
Hartford, Connecticut 06103
Facsimile No. : (860) 244-1897
Attention: Steven Cimalore
Any notice to be mailed to a registered holder of Units shall be
mailed to each holder at its address as it appears on the register of Units
maintained by the Unit Agent. Copies of any such communication shall also be
mailed to the Unit Agent, the Trustee and the Warrant Agent. The Unit Agent
shall furnish Holdings, the Company, the Trustee or the Warrant Agent promptly
when requested with a list of registered holders of Units for the purpose of
mailing any notice or communication to the registered holders of the Units, the
Notes or the Warrants and at such other times as may be reasonably requested.
Section 9. Supplements and Amendments. Holdings, the Company and the
--------------------------
Unit Agent may from time to time supplement or amend this Unit Agreement without
the approval of any registered holders of Units in order to cure any ambiguity
or to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provision herein, or to make any other
provisions in regard to matters or questions arising hereunder which Holdings,
the Company, the Trustee, the Warrant Agent and the Unit Agent may deem
necessary or desirable and which shall not, as evidenced by an opinion of
counsel delivered to the Unit Agent, the Trustee and the Warrant Agent, in any
way adversely affect the interests of the registered holders of Units. Any
amendment or supplement to this Unit Agreement that has a material adverse
effect on the interests of Unit holders shall require the written consent of the
registered holders of not less than a majority of the outstanding Units. Each
of the Unit Agent, the Trustee and the Warrant Agent shall be entitled to
receive and, subject to Section 5, shall be fully protected in relying upon an
officers' certificate and opinion of counsel as conclusive evidence that any
such amendment or supplement is authorized or permitted hereunder, that it is
not inconsistent herewith, and that it will be valid and binding upon Holdings
and the Company in accordance with its terms. Holdings and the Company may not
sign any amendment or supplement until Holdings and the Company's board of
directors approves it.
Section 10. Successors. All the covenants and provisions of this
----------
Unit Agreement by or for the benefit of Holdings, the Company, the Trustee, the
Warrant Agent or the Unit Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 11. Governing Law. THIS UNIT AGREEMENT AND EACH UNIT
-------------
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
Section 12. Benefits of This Unit Agreement. Nothing in this
-------------------------------
Agreement shall be construed to give to any person or corporation other than
Holdings, the Company, the Trustee, the Warrant Agent, the Unit Agent and the
registered holders of the Units any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of Holdings, the Company, the Trustee, the Warrant Agent, the Unit Agent
and the registered holders of the Unit Certificates.
Section 13. Counterparts. This Agreement may be executed in any
------------
number of
18
<PAGE>
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 14. Headings. The headings in this Agreement are for
--------
convenience of reference only and shall not limit or otherwise affect the
meaning of any provision hereof.
Section 15. Severability. The provisions of this Unit Agreement are
------------
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Unit Agreement in any jurisdiction.
[Signature page(s) follow]
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Unit Agreement
to be duly executed, as of the day and year first above written.
AMERICAN MOBILE SATELLITE CORPORATION
By:
--------------------------------------
Name:
Title:
AMSC ACQUISITION COMPANY, INC.
By:
--------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Unit Agent
By:
--------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
--------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Warrant Agent
By:
--------------------------------------
Name:
Title:
Unit Agreement signature page(s)
20
<PAGE>
EXHIBIT A1
[FORM OF UNIT]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO (A) OFFER,
SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY ONLY (1) TO HOLDINGS OR THE
COMPANY, (2) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (3) TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (4) PURSUANT TO OFFERS AND SALES TO NON-U.S.
PERSONS THAT OCCUR OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (5) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT (AN "IAI") THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE UNIT AGENT, AND, IN THE CASE OF ANY TRANSFER TO ANY
IAI OF SECURITIES WHICH INCLUDE AN AGGREGATE PRINCIPAL AMOUNT OF $250,000 OR
LESS OF NOTES, AN OPINION OF COUNSEL IF HOLDINGS SO REQUESTS OR (6) PURSUANT TO
ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT (AND BASED ON AN OPINION OF COUNSEL IF HOLDINGS SO REQUESTS),
SUBJECT IN EACH OF THE FOREGOING CASES TO APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THAT IT
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF
THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
THIS GLOBAL UNIT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE UNIT
AGREEMENT GOVERNING THIS UNIT) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE UNIT AGENT MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 3.7 OF THE UNIT AGREEMENT , (II) THIS GLOBAL
UNIT MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 3.6(a) OF THE
UNIT AGREEMENT, (III) THIS GLOBAL UNIT MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 3.11 OF THE UNIT AGREEMENT AND (IV) THIS GLOBAL
UNIT MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT
OF HOLDINGS AND THE COMPANY.
EACH UNIT REPRESENTED BY THIS SECURITY CONSISTS OF ONE NOTE OF $1,000
PRINCIPAL AMOUNT OF 12 1/4% SENIOR NOTES DUE 2008 (THE "NOTES") OF AMSC
ACQUISITION COMPANY, INC. AND ONE WARRANT (THE "WARRANTS"), EACH WARRANT TO
PURCHASE INITIALLY 3.75749 SHARES OF COMMON STOCK OF AMERICAN MOBILE
A1-1
<PAGE>
SATELLITE CORPORATION. THE NOTES AND WARRANTS WILL BE TRANSFERABLE BY A HOLDER
THEREOF SEPARATELY FROM EACH OTHER UPON THE EARLIEST TO OCCUR OF (I) 180 DAYS
AFTER THE DATE OF ORIGINAL ISSUANCE OF THE UNITS, (II) SUCH DATE AS MAY BE
DETERMINED BY BEAR, STEARNS CO. INC, (III) IN THE EVENT A CHANGE OF CONTROL (AS
DEFINED IN THE INDENTURE) OCCURS, THE DATE THAT THE COMPANY MAILS NOTICE THEREOF
TO HOLDERS OF THE NOTES (IV) THE COMMENCEMENT OF THE EXCHANGE OFFER AND (V) THE
EFFECTIVENESS OF THE SHELF REGISTRATION STATEMENT RELATING TO THE NOTES.
A1-2
<PAGE>
AMERICAN MOBILE SATELLITE CORPORATION
AMSC ACQUISITION COMPANY, INC.
335,000 Units Consisting of $335,000,000 in aggregate Principal Amount of
12 1/4% Senior Notes due 2008 of AMSC Acquisition Company, Inc. and
Warrants to purchase initially 1,258,759 Shares of Common Stock of
American Mobile Satellite Corporation
NO. ________ CUSIP NO. 02755RAA1
American Mobile Satellite Corporation, a Delaware corporation (the
"HOLDINGS"), AMSC Acquisition Company, Inc., a Delaware corporation (the
"COMPANY"), hereby certifies that ____________ is the owner of ________ Units as
described above, transferable only on the books of the Company by the holder
thereof in person or by his or her duly authorized attorney, on surrender of the
Certificate properly endorsed.
Each Unit consists of $1,000 principal amount of 12 1/4% Senior Notes
due 2008 of the Company (the "NOTES") and one Warrant (the "WARRANTS") to
purchase initially 3.75749 shares of common stock, par value $.01 per share, of
Holdings (the "COMMON STOCK"). This Unit, comprised of the Notes attached
hereto as Part 1 and the Warrants attached hereto as Part 2, is issued pursuant
------ ------
to the Unit Agreement (the "UNIT AGREEMENT") dated as of March 31, 1998 between
Holdings, the Company and State Street Bank and Trust Company, as unit agent
(the "UNIT AGENT"), and is subject to the terms and provisions contained
therein, all of which terms and provisions the holder of this Unit Certificate
consents by acceptance hereof. The terms of the Notes are governed by an
Indenture (the "INDENTURE") dated as of March 31, 1998 among the Company, the
Guarantors (as defined therein) and State Street Bank and Trust Company, as
trustee (the "TRUSTEE"), and are subject to the terms and provisions contained
therein, all of which terms and provisions the holder of this Unit Certificate
consents by acceptance hereof. The Notes are also subject to the terms and
provisions of the Pledge and Security Agreement (the "PLEDGE AGREEMENT") dated
as of March 31, 1998 between the Company and State Street Bank and Trust
Company, as escrow agent (the "ESCROW AGENT") , all of which terms and
provisions the holder of this Unit Certificate consents by acceptance hereof.
The terms of the Warrants are governed by the warrant agreement (the "WARRANT
AGREEMENT") dated as of March 31, 1998 between Holdings and State Street Bank
and Trust Company, as warrant agent (the "WARRANT AGENT"), and are subject to
the terms and provisions contained therein, all of which terms and provisions
the holder of this Unit Certificate consents by acceptance hereof.
Reference is made to the further provisions in each of the Unit
Agreement, Indenture, the Warrant Agreement, the Pledge and Security Agreement
and this Unit Certificate, which will for all purposes have the same effect as
if set forth at this place. Copies of the Unit Agreement, the Indenture, the
Warrant Agreement and the Pledge and Security Agreement are on file at the
office of State Street Bank and Trust Company, Goodwin Square, 225 Asylum
Street, Hartford, Connecticut 06103, and are available to any holder on written
request and without cost.
The Notes and the Warrants represented by this Unit Certificate shall
be non-detachable and not separately transferable until the earliest to occur of
(i) 180 days after the date of original issuance of the Units, (ii) such date as
may be determined by Bear, Stearns Co. Inc., (iii) in the event a Change of
A1-3
<PAGE>
Control (as defined in the Indenture) occurs, the date that the Company mails
notice thereof to holders of the Notes (iv) the commencement of the Exchange
Offer and (v) the effectiveness of the shelf registration statement relating to
the Notes.
A1-4
<PAGE>
Dated: March 31, 1998.
AMERICAN MOBILE SATELLITE CORPORATION
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
AMSC ACQUISITION COMPANY, INC.
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
Certificate of Authentication: STATE STREET BANK AND TRUST COMPANY,
This is one of the Units as Unit Agent
referred to in the within
mentioned Unit Agreement.
By:
--------------------------------------
Name:
Title:
A1-5
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Unit to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of Holdings and the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date:__________________
Your Signature:_____________________________________
(Sign exactly as your name appears on the face of
this Unit)
Tax Identification No:______________________________
SIGNATURE GUARANTEE:
_________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include membership
or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the
Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A1-6
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Unit for an interest
in another Global Unit or for a Definitive Unit, or exchanges of a part of
another Global Unit or Definitive Unit for an interest in this Global Unit, have
been made:
<TABLE>
<CAPTION>
Aggregate Number
of Units in this Signature of
Amount of decrease Amount of increase Global Unit authorized
in Aggregate in Aggregate following such officer of Unit
Number of Units in Number of Units in decrease (or Agent or Unit
Date of Exchange this Global Unit this Global Unit increase) Custodian
<S> <C> <C> <C> <C>
- ----------------- ------------------ -------------------- ------------------- -----------------
- ----------------- ------------------ -------------------- ------------------- -----------------
- ----------------- ------------------ -------------------- ------------------- -----------------
- ----------------- ------------------ -------------------- ------------------- -----------------
- ----------------- ------------------ -------------------- ------------------- -----------------
- ----------------- ------------------ -------------------- ------------------- -----------------
- ----------------- ------------------ -------------------- ------------------- -----------------
- ----------------- ------------------ -------------------- ------------------- -----------------
- ----------------- ------------------ -------------------- ------------------- -----------------
- ----------------- ------------------ -------------------- ------------------- -----------------
- ----------------- ------------------ -------------------- ------------------- -----------------
- ----------------- ------------------ -------------------- ------------------- -----------------
- ----------------- ------------------ -------------------- ------------------- -----------------
- ----------------- ------------------ -------------------- ------------------- -----------------
- ----------------- ------------------ -------------------- ------------------- -----------------
- ----------------- ------------------ -------------------- ------------------- -----------------
- ----------------- ------------------ -------------------- ------------------- -----------------
- ----------------- ------------------ -------------------- ------------------- -----------------
</TABLE>
A1-7
<PAGE>
EXHIBIT A2
[FORM OF UNIT]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO (A) OFFER,
SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY ONLY (1) TO HOLDINGS OR THE
COMPANY, (2) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (3) TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (4) PURSUANT TO OFFERS AND SALES TO NON-U.S.
PERSONS THAT OCCUR OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (5) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT (AN "IAI") THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE UNIT AGENT, AND, IN THE CASE OF ANY TRANSFER TO ANY
IAI OF SECURITIES WHICH INCLUDE AN AGGREGATE PRINCIPAL AMOUNT OF $250,000 OR
LESS OF NOTES, AN OPINION OF COUNSEL IF HOLDINGS SO REQUESTS OR (6) PURSUANT TO
ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT (AND BASED ON AN OPINION OF COUNSEL IF HOLDINGS SO REQUESTS),
SUBJECT IN EACH OF THE FOREGOING CASES TO APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THAT IT
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF
THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
THIS GLOBAL UNIT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE UNIT
AGREEMENT GOVERNING THIS UNIT) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE UNIT AGENT MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 3.7 OF THE UNIT AGREEMENT , (II) THIS GLOBAL
UNIT MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 3.6(a) OF THE
UNIT AGREEMENT, (III) THIS GLOBAL UNIT MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 3.11 OF THE UNIT AGREEMENT AND (IV) THIS GLOBAL
UNIT MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT
OF HOLDINGS AND THE COMPANY.
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL UNIT, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED UNITS, ARE AS
SPECIFIED IN THE UNIT AGREEMENT NEITHER THE
A2-1
<PAGE>
HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL UNIT
SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
EACH UNIT REPRESENTED BY THIS SECURITY CONSISTS OF ONE NOTE OF $1,000
PRINCIPAL AMOUNT OF 12 1/4% SENIOR NOTES DUE 2008 (THE "NOTES") OF AMSC
ACQUISITION COMPANY, INC. AND ONE WARRANT (THE "WARRANTS"), EACH WARRANT TO
PURCHASE INITIALLY 3.75749 SHARES OF COMMON STOCK OF AMERICAN MOBILE SATELLITE
CORPORATION. THE NOTES AND WARRANTS WILL BE TRANSFERABLE BY A HOLDER THEREOF
SEPARATELY FROM EACH OTHER UPON THE EARLIEST TO OCCUR OF (I) 180 DAYS AFTER THE
DATE OF ORIGINAL ISSUANCE OF THE UNITS, (II) SUCH DATE AS MAY BE DETERMINED BY
BEAR, STEARNS CO. INC, (III) IN THE EVENT A CHANGE OF CONTROL (AS DEFINED IN THE
INDENTURE) OCCURS, THE DATE THAT THE COMPANY MAILS NOTICE THEREOF TO HOLDERS OF
THE NOTES (IV) THE COMMENCEMENT OF THE EXCHANGE OFFER AND (V) THE EFFECTIVENESS
OF THE SHELF REGISTRATION STATEMENT RELATING TO THE NOTES.
A2-2
<PAGE>
AMERICAN MOBILE SATELLITE CORPORATION
AMSC ACQUISITION COMPANY, INC.
335,000 Units Consisting of $335,000,000 in aggregate Principal Amount of
12 1/4% Senior Notes Due 2008 of AMSC Acquisition Company, Inc. and
335,000 Warrants to purchase initially 1,258,759 Shares of Common Stock of
American Mobile Satellite Corporation
NO. ________ CUSIP NO. U0275LAA6
American Mobile Satellite Corporation, a Delaware corporation (the
"HOLDINGS"), AMSC Acquisition Company, Inc., a Delaware corporation (the
"COMPANY"), hereby certifies that ____________ is the owner of ________ Units as
described above, transferable only on the books of the Company by the holder
thereof in person or by his or her duly authorized attorney, on surrender of the
Certificate properly endorsed.
Each Unit consists of $1,000 principal amount of 12 1/4% Senior Notes
due 2008 of the Company (the "NOTES") and one Warrant (the "WARRANTS") to
purchase initially 3.75749 shares of common stock, par value $.01 per share, of
Holdings (the "COMMON STOCK"). This Unit, comprised of the Notes attached
hereto as Part 1 and the Warrants attached hereto as Part 2, is issued pursuant
------ ------
to the Unit Agreement (the "UNIT AGREEMENT") dated as of March 31, 1998 between
Holdings, the Company and State Street Bank and Trust Company, as unit agent
(the "UNIT AGENT"), and is subject to the terms and provisions contained
therein, all of which terms and provisions the holder of this Unit Certificate
consents by acceptance hereof. The terms of the Notes are governed by an
Indenture (the "INDENTURE") dated as of March 31, 1998 among the Company, the
Guarantors (as defined therein) and State Street Bank and Trust Company, as
trustee (the "TRUSTEE"), and are subject to the terms and provisions contained
therein, all of which terms and provisions the holder of this Unit Certificate
consents by acceptance hereof. The Notes are also subject to the terms and
provisions of the Pledge and Security Agreement (the "PLEDGE AGREEMENT") dated
as of March 31, 1998 between the Company and State Street Bank and Trust
Company, as escrow agent (the "ESCROW AGENT") , all of which terms and
provisions the holder of this Unit Certificate consents by acceptance hereof.
The terms of the Warrants are governed by the warrant agreement (the "WARRANT
AGREEMENT") dated as of March 31, 1998 between Holdings and State Street Bank
and Trust Company, as warrant agent (the "WARRANT AGENT"), and are subject to
the terms and provisions contained therein, all of which terms and provisions
the holder of this Unit Certificate consents by acceptance hereof.
Until this Regulation S Temporary Global Unit is exchanged for one or
more Regulation S Permanent Global Units, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Unit shall in all other respects be entitled
to the same benefits as any other Unit under the Indenture.
This Regulation S Temporary Global Unit is exchangeable in whole or in
part for one or more Global Units only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S) and (ii) upon presentation
of certificates (accompanied by an Opinion of Counsel, if applicable) required
by Section 3 of the Unit Agreement. Upon exchange of this Regulation S
A2-3
<PAGE>
Temporary Global Unit for one or more Global Units, the Unit Agent shall cancel
this Regulation S Temporary Global Unit.
Reference is made to the further provisions in each of the Unit
Agreement, Indenture, the Warrant Agreement, the Pledge Agreement and this Unit
Certificate, which will for all purposes have the same effect as if set forth at
this place. Copies of the Unit Agreement, the Indenture, the Warrant Agreement
and the Pledge Agreement are on file at the office of State Street Bank and
Trust Company, Goodwin Square, 225 Asylum Street, Hartford, Connecticut, 06103
and are available to any holder on written request and without cost.
The Notes and the Warrants represented by this Unit Certificate shall
be non-detachable and not separately transferable until the earliest to occur of
(i) 180 days after the date of original issuance of the Units, (ii) such date as
may be determined by Bear, Stearns Co. Inc., (iii) in the event a Change of
Control (as defined in the Indenture) occurs, the date that the Company mails
notice thereof to holders of the Notes (iv) the commencement of the Exchange
Offer and (v) the effectiveness of the shelf registration statement relating to
the Notes.
A2-4
<PAGE>
Dated: March 31, 1998.
AMERICAN MOBILE SATELLITE CORPORATION
By:
----------------------------------------
Name:
Title:
By:
----------------------------------------
Name:
Title:
AMSC ACQUISITION COMPANY, INC.
By:
----------------------------------------
Name:
Title:
By:
----------------------------------------
Name:
Title:
Certificate of Authentication: STATE STREET BANK AND TRUST COMPANY,
This is one of the Units as Unit Agent
referred to in the within
mentioned Unit Agreement.
By:
----------------------------------------
Name:
Title:
A2-5
<PAGE>
ASSIGNMENT FORM
To assign this Unit, fill in the form below: (I) or (we) assign and transfer
this Unit to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Unit on the books of Holdings the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date:________________________
Your Signature:____________________________________
(Sign exactly as your name appears on the face of
this Unit)
Tax Identification No:_____________________________
SIGNATURE GUARANTEE:
________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Registrar, which requirements include membership
or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the
Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
A2-6
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL UNIT
The following exchanges of a part of this Regulation S Temporary
Global Unit for an interest in another Global Unit, or of other Restricted
Global Unit for an interest in this Regulation S Temporary Global Unit, have
been made:
<TABLE>
<CAPTION>
Aggregate Number
of Units in this Signature of
Amount of decrease Amount of increase Global Unit authorized
in Aggregate in Aggregate following such officer of Unit
Number of Units in Number of Units in decrease (or Agent or Unit
Date of Exchange this Global Unit this Global Unit increase) Custodian
<S> <C> <C> <C> <C>
- ----------------- ------------------ -------------------- ------------------ ------------------
- ----------------- ------------------ -------------------- ------------------ ------------------
- ----------------- ------------------ -------------------- ------------------ ------------------
- ----------------- ------------------ -------------------- ------------------ ------------------
- ----------------- ------------------ -------------------- ------------------ ------------------
- ----------------- ------------------ -------------------- ------------------ ------------------
- ----------------- ------------------ -------------------- ------------------ ------------------
- ----------------- ------------------ -------------------- ------------------ ------------------
- ----------------- ------------------ -------------------- ------------------ ------------------
- ----------------- ------------------ -------------------- ------------------ ------------------
- ----------------- ------------------ -------------------- ------------------ ------------------
- ----------------- ------------------ -------------------- ------------------ ------------------
- ----------------- ------------------ -------------------- ------------------ ------------------
- ----------------- ------------------ -------------------- ------------------ ------------------
- ----------------- ------------------ -------------------- ------------------ ------------------
</TABLE>
A2-7
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
American Mobile Satellite Corporation
AMSC Acquisition Company, Inc.
10802 Parkridge Blvd.
Reston, Virginia 20191-5416
Attention: Randy S. Segal, Esq.
State Street Bank and Trust Company
Goodwin Square
225 Asylum Street
Hartford, Connecticut 06103
Attention: Steven Cimalore
Re: Units of American Mobile Satellite Corporation and
AMSC Acquisition Company, Inc.
--------------------------------------------------
CUSIP
Reference is hereby made to the Unit Agreement, dated as of March 31,
1998 (the "UNIT AGREEMENT"), among American Mobile Satellite Corporation
("HOLDINGS"), AMSC Acquisition Company, Inc. (the "COMPANY") and State Street
Bank and Trust Company, as unit agent. Capitalized terms used but not defined
herein shall have the meanings given to them in the Unit Agreement.
______________, (the "TRANSFEROR") owns and proposes to transfer the
Unit[s] or interest in such Unit[s] specified in Annex A hereto, in the amount
of ___________ in such Unit[s] or interests (the "TRANSFER"), to __________
(the "TRANSFEREE"), as further specified in Annex A hereto. In connection with
the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
----------------------------------------------------------------------
144A GLOBAL UNIT OR A DEFINITIVE UNIT PURSUANT TO RULE 144A. The Transfer is
- -----------------------------------------------------------
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "SECURITIES ACT"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Unit is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Unit for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "QUALIFIED INSTITUTIONAL BUYER" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with
the terms of the Unit Agreement, the transferred beneficial interest or
Definitive Unit will be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the 144A Global Unit and/or the
Definitive Unit and in the Unit Agreement and the Securities Act.
B-1
<PAGE>
2. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
----------------------------------------------------------------------
TEMPORARY REGULATION S GLOBAL UNIT, THE REGULATION S GLOBAL UNIT OR A DEFINITIVE
- --------------------------------------------------------------------------------
UNIT PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and
- -----------------------------
in accordance with Rule 903 or Rule 904 under the Securities Act and,
accordingly, the Transferor hereby further certifies that (i) the Transfer is
not being made to a person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting on its behalf reasonably believed and believes
that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows
that the transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the requirements of
Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act and, (iii)
the transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person or for the account or benefit of a U.S. Person (other than
an Initial Purchaser). Upon consummation of the proposed transfer in accordance
with the terms of the Unite Agreement, the transferred beneficial interest or
Definitive Unit will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend printed on the Regulation S Global Unit, the
Temporary Regulation S Global Unit and/or the Definitive Unit and in the Unit
Agreement and the Securities Act.
3. [_] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
-------------------------------------------------------------------
INTEREST IN THE IAI GLOBAL UNIT OR A DEFINITIVE UNIT PURSUANT TO ANY PROVISION
- ------------------------------------------------------------------------------
OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is
- ----------------------------------------------------------
being effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Units and Restricted Definitive Units
and pursuant to and in accordance with the Securities Act and any applicable
blue sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [_] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) [_] such Transfer is being effected to Holdings, the Company or a
subsidiary thereof ;
or
(c) [_] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [_] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that it has not engaged in any general solicitation
within the meaning of Regulation D under the Securities Act and the Transfer
complies with the transfer restrictions applicable to beneficial interests in a
Restricted Global Unit or Restricted Definitive Units and the requirements of
the exemption claimed, which certification is supported by (1) a
B-2
<PAGE>
certificate executed by the Transferee in the form of Exhibit D to the Unit
Agreement and (2) if such Transfer is in respect of Units comprised of a
principal amount of Notes at the time of transfer of less than $250,000, an
Opinion of Counsel provided by the Transferor or the Transferee (a copy of which
the Transferor has attached to this certification), to the effect that such
Transfer is in compliance with the Securities Act. Upon consummation of the
proposed transfer in accordance with the terms of the Unit Agreement, the
transferred beneficial interest or Definitive Unit will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the IAI Global Unit and/or the Definitive Units and in the Unit Agreement and
the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of Holdings and the Company.
-------------------------------------------
[Insert Name of Transferor]
By:
----------------------------------------
Name:
Title:
Dated: ________ __, ____
B-3
<PAGE>
ANNEX A
TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Unit (CUSIP _________), or
(ii) [_] Regulation S Global Unit (CUSIP _________), or
(iii) [_] IAI Global Unit (CUSIP ________); or
(b) [_] a Restricted Definitive Unit.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Unit (CUSIP ________), or
(ii) [_] Regulation S Global Unit (CUSIP ________), or
(iii) [_] IAI Global Unit (CUSIP ________); or
(b) [_] a Restricted Definitive Unit;
in accordance with the terms of the Unit Agreement.
B-4
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
American Mobile Satellite Corporation
AMSC Acquisition Company, Inc.
10802 Parkridge Blvd.
Reston, Virginia 20191-5416
Attention: Randy S. Segal, Esq.
State Street Bank and Trust Company
Goodwin Square
225 Asylum Street
Hartford, Connecticut 06103
Attention: Steven Cimalore
Re: Units of American Mobile Satellite Corporation and
AMSC Acquisition Company, Inc.
--------------------------------------------------
(CUSIP __________)
Reference is hereby made to the Unit Agreement, dated as of March 31,
1998 (the "UNIT AGREEMENT"), among American Mobile Satellite Corporation
("HOLDINGS"), AMSC Acquisition Company, Inc. (the "COMPANY") and State Street
Bank and Trust Company, as unit agent. Capitalized terms used but not defined
herein shall have the meanings given to them in the Unit Agreement.
____________, (the "OWNER") owns and proposes to exchange the Unit[s]
or interest in such Unit[s] specified herein, in the amount of ________ in such
Unit[s] or interests (the "EXCHANGE"). In connection with the Exchange, the
Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE UNITS OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL UNITS FOR RESTRICTED DEFINITIVE UNITS OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL UNITS.
(a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
-------------------------------------------------------------
GLOBAL UNIT TO RESTRICTED DEFINITIVE UNIT. In connection with the Exchange of
- -----------------------------------------
the Owner's beneficial interest in a Restricted Global Unit for a Restricted
Definitive Unit with an equal aggregate number, the Owner hereby certifies that
the Restricted Definitive Unit is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Unit Agreement, the Restricted Definitive Unit issued will
continue to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Unit and in the Unit
Agreement and the Securities Act.
(b) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE UNIT TO
-------------------------------------------------------
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL UNIT. In connection with the
- -----------------------------------------------
Exchange of the Owner's Restricted Definitive Unit for a beneficial interest in
the [CHECK ONE] [ ] 144A Global Unit, [ ] Regulation S Global Unit, [ ] IAI
Global Unit with an equal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer and (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Units and
C-1
<PAGE>
pursuant to and in accordance with the Securities Act, and in compliance with
any applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Exchange in accordance with the terms of the Unit
Agreement, the beneficial interest issued will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the relevant
Restricted Global Unit and in the Unit Agreement and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of Holdings and the Company.
__________________________________
[Insert Name of Owner]
By:
-------------------------------
Name:
Title:
Dated: ________________, ____
C-2
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
American Mobile Satellite Corporation
AMSC Acquisition Company, Inc.
10802 Parkridge Blvd.
Reston, Virginia 20191-5416
Attention: Randy S. Segal, Esq.
State Street Bank and Trust Company
Goodwin Square
225 Asylum Street
Hartford, Connecticut 06103
Attention: Steven Cimalore
Re: Units of American Mobile Satellite Corporation and
AMSC Acquisition Company, Inc.
--------------------------------------------------
(CUSIP __________)
Reference is hereby made to the Unit Agreement, dated as of March 31,
1998 (the "UNIT AGREEMENT"), among American Mobile Satellite Corporation
("HOLDINGS"), AMSC Acquisition Company, Inc. (the "COMPANY") and State Street
Bank and Trust Company, as unit agent. Capitalized terms used but not defined
herein shall have the meanings given to them in the Unit Agreement.
In connection with our proposed purchase of ______ aggregate number
of:
(a) [_] a beneficial interest in a Global Unit, or
(b) [_] a Definitive Unit,
we confirm that:
1. We understand that any subsequent transfer of the Units or any
interest therein is subject to certain restrictions and conditions set forth in
the Unit Agreement and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Units or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "SECURITIES ACT").
2. We understand that the offer and sale of the Units have not been
registered under the Securities Act, and that the Units and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Units or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "QUALIFIED INSTITUTIONAL
BUYER" (as defined therein), (c) to an institutional "ACCREDITED
D-1
<PAGE>
INVESTOR" (as defined below) that, prior to such transfer, furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to you and to the Company a
signed letter substantially in the form of this letter and, if such transfer is
in respect to Units comprised of a principal amount of Notes, at the time of
transfer of less than $250,000, an Opinion of Counsel in form reasonably
acceptable to Holdings and the Company to the effect that such transfer is in
compliance with the Securities Act, (D) outside the United States in accordance
with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the
provisions of Rule 144(k) under the Securities Act or (F) pursuant to an
effective registration statement under the Securities Act, and we further agree
to provide to any person purchasing the Definitive Unit or beneficial interest
in a Global Unit from us in a transaction meeting the requirements of clauses
(A) through (E) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Units or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Units purchased by
us will bear a legend to the foregoing effect. We further understand that any
subsequent transfer by us of the Units or beneficial interest therein acquired
by us must be effected through one of the Initial Purchasers.
4. We are an institutional "ACCREDITED INVESTOR" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Units, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Units or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "ACCREDITED INVESTOR") as to each of which we exercise sole
investment discretion.
You Holdings and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
__________________________________________
[Insert Name of Accredited Investor]
By:
---------------------------------------
Name:
Title:
Dated: __________________, ____
D-2
<PAGE>
Exhibit 23.1
STRATEGIS FINANCIAL CONSULTING, INC.
CONSENT OF THE STRATEGIS GROUP
We hereby consent to the inclusion of our market research data contained in the
Registration Statement on Form S-4, and to the references to our firm and such
data in the Prospectus included in such Registration Statement. In giving such
consent, we do not admit that we come within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as amended
(the "Act"), or the rules and regulations of the Securities and Exchange
Commission thereunder (the "Regulations"), nor do we admit that we are experts
with respect to any part of such Registration Statement within the meaning of
the term "experts" as used in the Act or the Regulations.
STRATEGIS FINANCIAL CONSULTING, INC.
May 15, 1998
/s/ Elliott Hamilton
- --------------------
Elliott Hamilton
Senior Vice President
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-4 of our report dated March
31, 1998 included in American Mobile Satellite Corporation's Form 10-K for the
year ended December 31, 1997 and to all references to our Firm included in this
registration statement.
/s/ Arthur Andersen LLP
Washington, D.C.
May 14, 1998
<PAGE>
EXHIBIT 23.3
Consent of Independent Public Accountants
The Board of Directors
ARDIS Holding Company:
We consent to the incorporation by reference into the American Mobile Satellite
Corporation (AMSC), AMSC Acquisition Company, Inc. Registration Statement on
Form S-4 of our report dated February 13, 1998, with respect to the combined
balance sheets of ARDIS Holding Company as of December 31, 1996 and 1997, and
the related combined statements of operations, stockholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1997,
which report appears in the AMSC Current Report on Form 8-K dated April 15, 1998
and to the reference to our firm under the headings "Summary Financial and Other
Data," "Selected Combined Financial and Other Data," and "Independent
Accountants" in the prospectus.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
May 13, 1998
<PAGE>
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
-----------------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2) [_]
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
John R. Towers, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
---------------------
AMSC Acquisition Company, Inc.
(Exact name of obligor as specified in its charter)
Delaware 54-1876634
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
10802 Parkridge Blvd.
Reston, VA 20191
(703) 758-6000
Series A and Series B
12 1/4% Senior Notes Due 2008
(Title of indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with Obligor.
If the Obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee or of its parent,
State Street Corporation.
(See note on page 2.)
Item 3. through Item 15. Not applicable.
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of
eligibility.
1. A copy of the articles of association of the trustee as now in
effect.
A copy of the Articles of Association of the trustee, as now in
effect, is on file with the Securities and Exchange Commission
as Exhibit 1 to Amendment No. 1 to the Statement of Eligibility
and Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc. (File No. 22-17940)
and is incorporated herein by reference thereto.
2. A copy of the certificate of authority of the trustee to
commence business, if not contained in the articles of
association.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee
to commence business was necessary or issued is on file with the
Securities and Exchange Commission as Exhibit 2 to Amendment No.
1 to the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Morse Shoe,
Inc. (File No. 22-17940) and is incorporated herein by reference
thereto.
3. A copy of the authorization of the trustee to exercise corporate
trust powers, if such authorization is not contained in the
documents specified in paragraph (1) or (2), above.
A copy of the authorization of the trustee to exercise corporate
trust powers is on file with the Securities and Exchange
Commission as Exhibit 3 to Amendment No. 1 to the Statement of
Eligibility and Qualification of Trustee (Form T-1) filed with
the Registraton Statement of Morse Shoe, Inc. (File No. 22-
17940) and is incorporated herein by reference thereto.
4. A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4 to
the Statement of Eligibility and Qualification of
<PAGE>
Trustee (Form T-1) filed with the Registration Statement of Eastern
Edison Company (File No. 33-37823) and is incorporated herein by
reference thereto.
5. A copy of each indenture referred to in Item 4. If the obligor is
in default.
Not applicable.
6. The consents of United States institutional trustees required by
Section 321(b) of the Act.
The consent of the trustee required by Section 321(b) of the Act is
annexed hereto as Exhibit 6 and made a part hereto.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority.
A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority is annexed hereto as Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2 of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which have
been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on May 13, 1998.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Steven Cimalore
NAME: Steven Cimalore
TITLE: Vice President
2
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issuance by AMSC
Acquisition Company, Inc. of its Series B 12 1/4% Senior Notes due 2008, we
hereby consent that reports of examination by Federal, State, Territorial or
District authorities may be furnished by such authorities to the Securities and
Exchange Commission upon request therefore.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Steven Cimalore
NAME: Steven Cimalore
TITLE: Vice President
Dated: May 13, 1998
3
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking
institution organized and operating under the banking laws of this commonwealth
and a member of the Federal Reserve System, at the close of business March 31,
---------
1997, published in accordance with a call made by the Federal Reserve Bank of
- ----
the District pursuant to the provisions of the Federal Reserve Act and in
accordance with a call made by the Commissioner of Banks under General Laws,
Chapter 172, Section 22(a).
<TABLE>
<CAPTION>
ASSETS Thousands of
Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.......................... 1,665,142
Interest-bearing balances...................................................... 8,193,292
Securities..................................................................... 10,238,113
Federal funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and its Edge subsidiary................................................ 5,853,144
Loans and lease financing receivables:
Loans and leases, net of unearned income....................... 4,936,454
Allowance for loan and lease losses............................ 70,307
Allocated transfer risk reserve................................ 0
Loans and leases, net of unearned income and allowances..................... 4,866,147
Assets held in trading accounts................................................ 957,478
Premises and fixed assets...................................................... 380,117
Other real estate owned........................................................
Investments in unconsolidated subsidiaries..................................... 25,835
Customers' liability to this bank on acceptances outstanding................... 45,548
Intangible assets.............................................................. 158,080
Other assets................................................................... 1,066,957
---------
Total assets................................................................... 33,450,737
==========
LIABILITIES
Deposits:
In domestic offices......................................................... 8,270,845
Noninterest-bearing...................................... 6,318,360
Interest-bearing......................................... 1,952,485
In foreign offices and Edge subsidiary......................................... 12,760,086
Noninterest-bearing...................................... 53,052
Interest-bearing......................................... 12,707,034
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary............................................ 8,216,641
Demand notes issued to the U.S. Treasury and Trading Liabilities............... 926,821
Other borrowed money........................................................... 671,164
Subordinated notes and debentures..............................................
Bank's liability on acceptances executed and outstanding....................... 46,137
Other liabilities.............................................................. 745,529
Total liabilities.............................................................. 31,637,223
----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus.................................. 0
Common stock................................................................... 29,931
Surplus
Undivided profits and capital reserves/Net unrealized holding gains (losses)... 1,426,881
Cumulative foreign currency translation adjustments............................ (4,015)
Total equity capital........................................................... 1,813,514
---------
Total liabilities and equity capital........................................... 33,450,737
==========
</TABLE>
4
<PAGE>
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that is has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Charles F. Kaye
5
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
AMERICAN MOBILE SATELLITE CORPORATION
AMSC ACQUISITION COMPANY, INC.
OFFER TO EXCHANGE ITS SERIES B 12 1/4 % SENIOR NOTES DUE 2008, WHICH
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT, FOR
ITS SERIES A 12 1/4 % SENIOR NOTES DUE 2008, WHICH HAVE NOT BEEN SO REGISTERED.
PURSUANT TO THE PROSPECTUS DATED MAY __, 1998
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON _____, 1998
UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO 5:00
P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY, EXCHANGE AGENT
<TABLE>
<CAPTION>
BY REGISTERED OR CERTIFIED MAIL: BY HAND OR OVERNIGHT COURIER: BY HAND IN BOSTON: BY HAND OR OVERNIGHT COURIER IN
NEW YORK (AS DROP AGENT):
<S> <C> <C> <C>
STATE STREET BANK STATE STREET BANK STATE STREET BANK STATE STREET BANK
AND TRUST COMPANY AND TRUST COMPANY AND TRUST COMPANY AND TRUST COMPANY N.A.
P.O. BOX 778 TWO INTERNATIONAL PLACE TWO INTERNATIONAL PLACE 61 BROADWAY
BOSTON, MASSACHUSETTS 02102 BOSTON, MASSACHUSETTS 02110 FOURTH FLOOR, CORPORATE TRUST FIFTEENTH FLOOR,
CORPORATE TRUST DEPARTMENT CORPORATE TRUST DEPARTMENT BOSTON MASSACHUSETTS 02110 CORPORATE TRUST WINDOW
ATTENTION: KELLIE MULLEN ATTENTION: KELLIE MULLEN NEW YORK, NEW YORK 10006
</TABLE>
CONFIRM BY TELEPHONE:
(617) 664-5587
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS OTHER THAN
AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated May ___, 1998 (the "Prospectus"), of American Mobile Satellite
Corporation ("Holdings") and AMSC Acquisition Company (the "Company") and this
Letter of Transmittal (the "Letter"), which together constitute the Company's
offer (the "Exchange Offer") to exchange up to $335,000,000 aggregate principal
amount of the Company's Series B 12 1/4 % Senior Notes Due 2008 (the "Exchange
Notes"), which have been registered under the Securities Act of 1933 (the
"Securities Act"), for a like principal amount of the Company's issued and
outstanding Series A 12 1/4 % Senior Notes Due 2008 (the "Old Notes"), which
have not been so registered.
For each Old Note accepted for exchange, the registered holder of such Old
Note (collectively with all other registered holders of Old Notes, the
"Holders") will receive an Exchange Note having a principal amount equal to that
of the surrendered Old Note. Registered holders of Exchange Notes on the
relevant record date for the first interest payment date following the
consummation of the Exchange Offer will receive interest accruing from the most
recent date to which interest has been paid or, if no interest has been paid,
from March 31, 1998. Old Notes accepted for exchange will cease to accrue
interest from and after the date of consummation of the Exchange Offer.
Accordingly, Holders whose Old Notes are accepted for exchange will not receive
any payment in respect of accrued interest on such Old Notes otherwise payable
on any interest payment date the record date for which occurs on or after
consummation of the Exchange Offer.
This Letter is to be completed by a Holder of Old Notes either if
certificates are to be forwarded herewith or if a tender of certificates for Old
Notes, if available, is to be made by book-entry transfer to the account
maintained by the Exchange Agent at The Depository Trust Company (the "Book-
Entry Transfer Facility") pursuant to the procedures set forth in "The Exchange
Offer Procedures for Tendering" section of the Prospectus. Holders of Old
Notes whose certificates are not immediately available, or who are unable to
deliver their certificates or confirmation of the book-entry tender of their Old
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility (a
"Book-Entry Confirmation") and all other documents required by this Letter to
the Exchange Agent on or prior to the Expiration Date, must tender their Old
Notes according to the guaranteed delivery procedures set forth in "The Exchange
Offer - Guaranteed Delivery Procedures" section of the Prospectus. See
Instruction 1. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Exchange Agent.
THE UNDERSIGNED HAS COMPLETED THE APPROPRIATE BOXES BELOW AND SIGNED THIS LETTER
TO INDICATE THE ACTION THE UNDERSIGNED DESIRES TO TAKE WITH RESPECT TO THE
EXCHANGE OFFER.
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of Old
Notes indicated below. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby sells, assigns
and transfers to, or upon the order of the Company all right, title and interest
in and to such Old Notes as are being tendered hereby.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim when the same are accepted by the Company. The
undersigned hereby further represents that any Exchange Notes acquired in
exchange for Old Notes tendered hereby will have been acquired in the ordinary
course of business of the person receiving such Exchange Notes, whether or not
such person is the undersigned, that neither the Holder of such Old Notes nor
any such other person has an arrangement or understanding with any person to
participate in the distribution of such Exchange Notes and that neither the
Holder of such Old Notes nor any such other person is an "affiliate" (as defined
in Rule 405 under the Securities Act) of the Company.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the Exchange Notes issued pursuant to the Exchange Offer in
exchange for the Old Notes may be offered for resale, resold and otherwise
transferred by a Holder thereof (other than a Holder that is an "affiliate" of
the Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such Exchange Notes are acquired in the ordinary
course of such Holder's business and such Holder has no arrangement with any
person to participate in a distribution of such Exchange Notes. However, the
SEC has not considered the Exchange Offer in the context of a no-action letter
and there can be no assurance that the staff of the SEC would make a similar
determination with respect to the Exchange Offer as in other circumstances. If
the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Notes and has no arrangement or understanding to participate in a distribution
of Exchange Notes. If any Holder is an affiliate of the Company, is engaged in
or intends to engage in, or has any arrangement or understanding with any person
to participate in, a distribution of the Exchange Notes to be acquired pursuant
to the Exchange Offer, such Holder could not rely on the applicable
interpretations of the staff of the SEC and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any resale transaction. If the undersigned is a broker-dealer that will receive
Exchange Notes for its own account in exchange for Old Notes that were acquired
as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Notes. However,
by so acknowledging and by delivering a prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer - Withdrawal of Tenders"
section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" herein, please issue the Exchange Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes,
<PAGE>
please credit the account indicated above maintained at the Book-Entry Transfer
Facility. Similarly, unless otherwise indicated under the box entitled "Special
Delivery Instructions" herein, please send the Exchange Notes (and, if
applicable, substitute certificates representing Old Notes for any Old Notes not
exchanged) to the undersigned at the address shown in the box herein entitled
"Description of Old Notes Delivered."
<PAGE>
THE UNDERSIGNED, BY COMPLETING THE BOX BELOW ENTITLED "DESCRIPTION OF
OLD NOTES DELIVERED" AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED
OLD NOTES AS SET FORTH IN SUCH BOX
List below the Old Notes to which this Letter relates. If the space provided
below is inadequate, the certificate numbers and principal amount of Old Notes
should be listed on a separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES DELIVERED
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NAME(S) AND ADDRESS OF REGISTERED AGGREGATE PRINCIPAL PRINCIPAL AMOUNT
HOLDER (PLEASE FILL IN, IF BLANK) CERTIFICATE NUMBER(S)* AMOUNT TENDERED**
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Totals:
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed if Old Notes are being tendered by book-entry
transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have
tendered ALL of the Old Notes represented by the listed certificates. See
Instruction 2. Old Notes tendered hereby must be in denominations of
principal amount of $1,000 and any integral multiple thereof. See
Instruction 1.
[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution ______________________________________________
Account Number ____________________ Transaction Code Number _______________
[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name of Registered Holder __________________________________________________
Window Ticket Number (if any) ______________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution Which Guaranteed Delivery ______________________________
If Delivered by Book-Entry Transfer, Complete the Following:
Account Number ____________________ Transaction Code Number______________
<PAGE>
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE ADDITIONAL COPIES
OF THE PROSPECTUS AND ANY AMENDMENTS OR SUPPLEMENTS THERETO. (UNLESS
OTHERWISE SPECIFIED, 10 ADDITIONAL COPIES WILL BE FURNISHED.)
NAME_______________________________________________________________________
ADDRESS____________________________________________________________________
<TABLE>
<S> <C>
- ------------------------------------------------------ -------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4) (See Instructions 3 and 4)
To be completed ONLY if certificates for To be completed ONLY if certificates for Old
Old Notes not exchanged and/or Exchange Notes are Notes not exchanged and/or Exchange Notes are to be
to be issued in the name of someone other than the sent to someone other than the person or persons whose
person or persons whose signature(s) appear(s) on this signature(s) appear(s) on this Letter below or to such
Letter below, or if Old Notes delivered by book-entry person or persons at an address other than shown in the
transfer which are not accepted for exchange are to be box entitled "Description of Old Notes Delivered" on
returned by credit to an account maintained at the this Letter above.
Book-Entry Transfer Facility other than the account
indicated above. Issue Exchange Notes and/or Old Mail Exchange Notes and/or Old Notes to:
Notes to:
Name:________________________________________________ Name:__________________________________________________
(Please Type or Print) (Please Type or Print)
Address:_____________________________________________ Address:_______________________________________________
_____________________________________________________ _______________________________________________________
(Zip Code) (Zip Code)
[_] Credit unexchanged Old Notes delivered by
book-entry transfer to the Book-Entry Transfer
Facility account set forth below.
____________________________________________________
(Book-Entry Transfer Facility Account)
- ------------------------------------------------------ -------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF OR AN AGENCY'S MESSAGE
IN LIEU HEREOF (TOGETHER WITH THE CERTIFICATES FOR OLD NOTES OR A BOOK-
ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF
GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00
P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS LETTER OF TRANSMITTAL CAREFULLY
BEFORE COMPLETING ANY BOX ABOVE
PLEASE SIGN HERE
(All Tendering Holders Must Complete This Letter
And the Accompanying Substitute Form W-9)
Dated:___________, 1998
X_______________________________________________________________________________
X_______________________________________________________________________________
Signature(s)
Area Code and Telephone Number:_________________________________________________
If a holder is tendering any Old Notes, this letter must be signed by the
Holder(s) as the name(s) appear(s) on the certificate(s) for the Old Notes or by
any person(s) authorized to become Holder(s) by endorsements and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, officer or other person acting in a fiduciary or representative
capacity, please set forth full title. See Instruction 3.
Name:___________________________________________________________________________
________________________________________________________________________________
(Please Type or Print)
Capacity (full title):__________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
Telephone:______________________________________________________________________
SIGNATURE GUARANTEE (IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by an Eligible Institution:_____________________________
(Authorized Signature)
________________________________________________________________________________
(Title)
________________________________________________________________________________
(Name and Firm)
Dated:___________________________________________________________________, 1998
- --------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER TO EXCHANGE
THE SERIES B 12 1/4 % SENIOR NOTES DUE 2008 OF AMERICAN MOBILE SATELLITE
CORPORATION AND AMSC ACQUISITION COMPANY
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT, FOR THE
OUTSTANDING SERIES A 12 1/4 % SENIOR NOTES DUE 2008
WHICH HAVE NOT BEEN SO REGISTERED.
1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES.
This Letter is to be completed by Holders of Old Notes either if
certificates are to be forwarded herewith or if tenders are to be made pursuant
to the procedures for delivery by book-entry transfer set forth in "The Exchange
Offer - Procedures for Tendering" section of the Prospectus. Certificates for
all physically tendered Old Notes, or Book-Entry Confirmation, as the case may
be, as well as a properly completed and duly executed Letter (or manually signed
facsimile hereof) and any other documents required by this Letter, must be
received by the Exchange Agent at the address set forth herein on or prior to
the Expiration Date, or the tendering holder must comply with the guaranteed
delivery procedures set forth below. Old Notes tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple thereof.
Holders whose certificates for Old Notes are not immediately available or
who cannot deliver their certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date, or who cannot complete the
procedure for book-entry transfer on a timely basis, may tender their Old Notes
pursuant to the guaranteed delivery procedures set forth in "The Exchange Offer
- - Guaranteed Delivery Procedures" section of the Prospectus. Pursuant to such
procedures, (i) such tender must be made through an Eligible Institution, (ii)
on or prior to 5:00 p.m., New York City time, on the Expiration Date, the
Exchange Agent must receive from such Eligible Institution a properly completed
and duly executed Letter (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within three New
York Stock Exchange ("NYSE") trading days after the date of execution of the
Notice of Guaranteed Delivery, the certificates for all physically tendered Old
Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case
may be, and any other documents required by this Letter will be deposited by the
Eligible Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Old Notes, in proper form for transfer, or Book-Entry
Confirmation, as the case may be, and any other documents required by this
Letter, are deposited by the Eligible Institution within three NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Old Notes and all other required
documents is at the election and risk of the tendering Holders, but the delivery
will be deemed made only when actually received or confirmed by the Exchange
Agent. If Old Notes are sent by mail, it is suggested that the mailing be
registered mail, properly insured, with return receipt requested, and made
sufficiently in advance of the Expiration Date to permit delivery to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO NOTEHOLDERS
WHO TENDER BY BOOK-ENTRY TRANSFER).
If less than all of the Old Notes evidenced by a submitted certificate are
to be tendered, the tendering holder(s) should fill in the aggregate principal
amount of Old Notes to be tendered in the box above entitled "Description of Old
Notes Delivered - Principal Amount Tendered." A reissued certificate
representing the balance of nontendered Old Notes will be sent to such tendering
Holder, unless otherwise provided in the appropriate box of this Letter,
promptly after the Expiration Date. All of the Old Notes delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
<PAGE>
3. SIGNATURES ON THIS LETTER, BOND POWERS AND
ENDORSEMENTS, GUARANTEE OF SIGNATURES.
If this Letter is signed by the Holder of the Old Notes tendered hereby,
the signature must correspond exactly with the name as written on the face of
the certificates without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint owners,
all of such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this letter as there are different registrations of certificates.
When this letter is signed by the Holder or Holders of the Old Notes
specified herein and tendered hereby, no endorsements of certificates or
separate bond powers are required. If however, the Exchange Notes are to be
issued, or any untendered Old Notes are to be reissued, to a person other than
the Holder, then endorsements of any certificates transmitted hereby or separate
bond powers are required. Signatures on such certificate(s) must be guaranteed
by an Eligible Institution.
If this letter is signed by a person other than the Holder or Holders of
any certificate(s) specified herein, such certificate(s) must be endorsed
accompanied by appropriate bond powers, in either case signed exactly as the
name or names of the Holder or Holders appear(s) on the certificate(s) and
signatures on such certificate(s) must be guaranteed by an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
ENDORSEMENTS ON CERTIFICATES FOR OLD NOTES OR SIGNATURES ON BOND POWERS
REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A FINANCIAL INSTITUTION
(INCLUDING MOST BANKS, SAVINGS AND LOAN ASSOCIATIONS AND BROKERAGE HOUSES) THAT
IS A PARTICIPANT IN THE SECURITIES TRANSFER AGENTS MEDALLION PROGRAM, THE NEW
YORK STOCK EXCHANGE MEDALLION SIGNATURE PROGRAM OR THE STOCK EXCHANGES MEDALLION
PROGRAM (EACH, AN "ELIGIBLE INSTITUTION").
SIGNATURES ON THIS LETTER NEED NOT BE GUARANTEED BY AN ELIGIBLE
INSTITUTION, PROVIDED THE OLD NOTES ARE TENDERED: (I) BY A REGISTERED HOLDER OF
OLD NOTES (WHICH TERM, FOR PURPOSES OF THE EXCHANGE OFFER, INCLUDES ANY
PARTICIPANT IN THE BOOK-ENTRY TRANSFER FACILITY SYSTEM WHOSE NAME APPEARS ON A
SECURITY POSITION LISTING AS THE HOLDER OF SUCH OLD NOTES) WHO HAS NOT COMPLETED
THE BOX ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS" OR "SPECIAL DELIVERY
INSTRUCTIONS" ON THIS LETTER, OR (II) FOR THE ACCOUNT OF AN ELIGIBLE
INSTITUTION.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering Holders of Old Notes should indicate in the applicable box the
name and address to which Exchange Notes issued pursuant to the Exchange Offer
and/or substitute certificates evidencing Old Notes not exchanged are to be
issued or sent, if different from the name or address of the person signing this
Letter. In the case of issuance in a different name, the employer
identification or social security number of the person named must also be
indicated. Holders tendering Old Notes by book-entry transfer may request that
Old Notes not exchanged be credited to such account maintained at the Book-Entry
Transfer Facility as such Holder may designate hereon. If no such instructions
are given, such Old Notes not exchanged will be returned to the name and address
of the person signing this Letter.
<PAGE>
5. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Old Notes to it or its order pursuant to the Exchange Offer. If, however,
Exchange Notes and/or substitute Old Notes not exchanged are to be delivered to,
or are to be registered or issued in the name of, any person other than the
Holder of the Old Notes tendered hereby, or if tendered Old Notes are registered
in the name of any person other than the person signing this Letter, or if a
transfer tax is imposed for any reason other than the transfer of Old Notes to
the Company or its order pursuant to the Exchange Offer, the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering Holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted herewith, the amount of such
transfer taxes will be billed to such tendering Holder and the Exchange Agent
will retain possession of an amount of Exchange Notes with a face amount equal
to the amount of such transfer taxes due by such tendering Holder pending
receipt by the Exchange Agent of the amount of such taxes.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes specified in this Letter.
6. WAIVER OF CONDITIONS
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
7. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders of Old Notes, by execution of this Letter,
shall waive any right to receive notice of the acceptance of their Old Notes for
exchange.
Although the Company intends to notify Holders of defects or irregularities
with respect to tenders of Old Notes, neither the Company, the Exchange Agent
nor any other person shall incur any liability for failure to give any such
notice.
8. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES.
Any Holder whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above for further
instructions.
9. WITHDRAWAL OF TENDERS.
Tenders of Old Notes may be withdrawn at any time prior to 5:00 P.M., New
York City time, on the Expiration Date. For a withdrawal to be effective, a
written notice of withdrawal must be received by the Exchange Agent at one of
the addresses set forth above. Any such notice of withdrawal must specify the
name of the person having tendered the Old Notes to be withdrawn, identify the
Old Notes to be withdrawn (including the principal amount of such Old Notes),
and (where certificates for Old Notes have been transmitted) specify the name in
which such Old Notes are registered, if different from that of the withdrawing
Holder. If certificates for Old Notes have been delivered or otherwise
identified to the Exchange Agent, then prior to the release of such certificates
the withdrawing Holder must also submit the serial numbers of the particular
certificates to be withdrawn and a signed notice of withdrawal with signatures
guaranteed by an Eligible Institution unless such Holder is an Eligible
Institution in which case such guarantee will not be required. If Old Notes
have been tendered pursuant to the procedure for book-entry transfer described
above, any notice of withdrawal must specify the name and number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn Old Notes
and otherwise comply with the procedures of such facility. All questions as to
the validity, form and eligibility (including time of receipt) of such notices
will be determined by the Company, whose determination will be final and binding
on all parties. Any Old Notes so withdrawn will be deemed not to have been
validly tendered for exchange for purposes of the Exchange Offer. Any Old Notes
which have been tendered for exchange but which are not exchanged for any
<PAGE>
reason will be returned to the Holder thereof without cost to such Holder (or,
in the case of Old Notes tendered by book-entry transfer into the Exchange
Agent's account at the Book Entry Transfer Facility pursuant to the book-entry
transfer procedures described above, such Old Notes will be credited to an
account maintained with such Book-Entry Transfer Facility for the Old Notes) as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following one
of the procedures set forth in "The Exchange Offer -- Procedures for Tendering "
set forth in the Prospectus at any time on or prior to the Expiration Date.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus, this Letter and other related documents may
be directed to the Exchange Agent, at (617) 664-5587.
Under current federal income tax law, a holder of Exchange Notes is
required to provide the Company (as payor) with such holder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 or otherwise establish a
basis for exemption from backup withholding to prevent backup withholding on any
Exchange Notes delivered pursuant to the Exchange Offer and any payments
received in respect of the Exchange Notes. If a holder of Exchange Notes is an
individual, the TIN is such holder's social security number. If the Company is
not provided with the correct taxpayer identification number, a holder of
Exchange Notes may be subject to a $50 penalty imposed by the Internal Revenue
Service. Accordingly, each prospective holder of Exchange Notes to be issued
pursuant to Special Issuance Instructions should complete the attached
Substitute Form W-9. The Substitute Form W-9 need not be completed if the box
entitled Special Issuance Instructions has not been completed.
Certain holders of Exchange Notes (including among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
reporting requirements. Exempt prospective holders of Exchange Notes should
indicate their exempt status on Substitute Form W-9. A foreign individual may
qualify as an exempt recipient by submitting to the Company, through the
Exchange Agent, a properly completed Internal Revenue Service form W-8 (which
the Exchange Agent will provide upon request) signed under penalty of perjury,
attesting to the holder's exempt status. See the enclosed Guidelines for
Certification of Taxpayer Identification Number or Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Company is required to withhold 31% of
any payment made to the holder of Exchange Notes or other payee. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on any Exchange Notes delivered pursuant to
the Exchange Offer and any payments received in respect of the Exchange Notes,
each prospective holder of Exchange Notes to be issued pursuant to Special
Issuance Instructions should provide the Company, through the Exchange Agent,
with either: (i) such prospective holder's correct TIN by completing the form
below, certifying that the TIN provided on Substitute Form W-9 is correct (or
that such prospective holder is awaiting a TIN) and that (A) such prospective
holder has not been notified by the Internal Revenue Service that he or she is
subject to backup withholding as a result of a failure to report all interest or
dividends or (B) the Internal Revenue Service has notified such prospective
holder that he or she is no longer subject to backup withholding; or (ii) an
adequate basis for exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The prospective holder of Exchange Notes to be issued pursuant to Special
Issuance Instructions is required to give the Exchange Agent the TIN (e.g.,
social security number or employer identification number) of the prospective
record owner of the Exchange Notes. If the Exchange Notes will be held in more
than one name or are not held in the name of the actual owner, consult the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional guidance regarding which number to report.
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE IMPORTANT TAX INFORMATION)
PAYOR'S NAME: STATE STREET BANK AND TRUST COMPANY
<TABLE>
<S> <C> <C>
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PART 1 - PLEASE PROVIDE
YOUR TIN IN THE BOX AT TIN:______________________________________
RIGHT OR INDICATE THAT Social Security Number or Employer
YOU APPLIED FOR A TIN AND Identification Number
CERTIFY BY SIGNING AND
DATING BELOW. TIN Applied for
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SUBSTITUTE PART 2 - CERTIFICATION - UNDER PENALTIES OF PERJURY, I CERTIFY
THAT:
Form W-9 (1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me);
Department of the Treasury (2) I am not subject to backup withholding either because: (a) I am exempt from
Internal Revenue Service backup withholding, or (b) I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (c) the IRS has notified me that I
PAYOR'S REQUEST FOR TAXPAYER am no longer subject to backup withholding; and
IDENTIFICATION NUMBER ("TIN") (3) any other information provided on this form is true and correct.
AND CERTIFICATION
Signature:___________________________________________ Date:__________________
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</TABLE>
You must cross out item (2) of the above certification if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting of interest or dividends on your tax return and you have not been
notified by the IRS that you are no longer subject to backup withholding.
NOTE: FAILURE BY A PROSPECTIVE HOLDER OF EXCHANGE NOTES TO BE ISSUED PURSUANT
TO THE SPECIAL ISSUANCE INSTRUCTIONS ABOVE TO COMPLETE AND RETURN THIS
FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF THE EXCHANGE NOTES
DELIVERED TO YOU PURSUANT TO THE EXCHANGE OFFER AND ANY PAYMENTS RECEIVED
BY YOU IN RESPECT OF THE EXCHANGE NOTES. PLEASE REVIEW THE ENCLOSED
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 2 OF SUSTITUTE FORM W-9
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CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or a Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number by the time of the
exchange, 31 percent of all reportable payments made to me thereafter will be
withheld until I provide a number.
______________________________________ ________________________________
Signature Date
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<PAGE>
EXHIBIT 99.2
AMERICAN MOBILE SATELLITE CORPORATION
AMSC ACQUISITION COMPANY, INC.
NOTICE OF GUARANTEED DELIVERY FOR TENDER OF ANY AND ALL OF THE OUTSTANDING
SERIES A 12 1/4 % SENIOR NOTES DUE 2008 OF AMSC ACQUISITION COMPANY, INC. FULLY
AND UNCONDITIONALLY GUARANTEED BY (i) AMERICAN MOBILE SATELLITE CORPORATION ON A
SUBORDINATED UNSECURED BASIS, (ii) ALL CURRENT AND FUTURE SUBSIDIARIES OF AMSC
ACQUISITION COMPANY.
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the Company's (as defined below) Series A 12 1/4 % Senior Notes
Due 2002 (the "Notes") are not immediately available, (ii) Old Notes, the Letter
of Transmittal and all other required documents cannot be delivered to State
Street Bank and Trust Company ("Exchange Agent") on or prior to the Expiration
Date (as defined in the Prospectus referred to below) or (iii) the procedures
for delivery by book-entry transfer cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand, overnight courier or
mail, or transmitted by facsimile transmission, to the Exchange Agent on or
prior to the Expiration Date. See "The Exchange Offer - Procedures for
Tendering" in the Prospectus. In addition, in order to utilize the guaranteed
delivery procedure to tender Old Notes pursuant to the Exchange Offer, a
completed, signed and dated Letter of Transmittal relating to the Old Notes (or
facsimile thereof) must also be received by the Exchange Agent prior to 5:00
p.m., New York City time, on the Expiration Date.
Capitalized terms used but not defined herein have the meanings given them
in the Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
STATE STREET BANK AND TRUST COMPANY
<TABLE>
<CAPTION>
BY REGISTERED OR CERTIFIED BY HAND OR OVERNIGHT COURIER: BY HAND IN BOSTON: BY HAND OR OVERNIGHT COURIER IN
Mail: NEW YORK (AS DROP AGENT):
<S> <C> <C> <C>
STATE STREET BANK STATE STREET BANK STATE STREET BANK STATE STREET BANK
AND TRUST COMPANY AND TRUST COMPANY AND TRUST COMPANY AND TRUST COMPANY N.A.
P.O. BOX 778 TWO INTERNATIONAL PLACE TWO INTERNATIONAL PLACE 61 BROADWAY
BOSTON, MASSACHUSETTS 02102 BOSTON, MASSACHUSETTS 02110 FOURTH FLOOR, CORPORATE TRUST FIFTEENTH FLOOR,
CORPORATE TRUST DEPARTMENT CORPORATE TRUST DEPARTMENT BOSTON MASSACHUSETTS 02110 CORPORATE TRUST WINDOW
ATTENTION: KELLIE MULLEN ATTENTION: KELLIE MULLEN NEW YORK, NEW YORK 10006
</TABLE>
To confirm by telephone or for information call:
(617) 664-5587
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA
FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to AMSC Acquisition Company, a Delaware
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Prospectus dated May ____, 1998 (as the same may be amended or
supplemented from time to time, the "Prospectus"), and the related Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of which
is hereby acknowledged, the aggregate principal amount of Old Notes set forth
below pursuant to the guaranteed delivery procedures set forth in the Prospectus
under the caption "The Exchange Offer -- Guaranteed Delivery Procedures."
Aggregate Principal
Amount Tendered: $____________________
Name(s) of
Registered
Holder(s):____________________________
______________________________________
Certificate No.(s)(if available):_____
______________________________________
If Old Notes will be tendered by book-entry
Entry Transfer, provide the following information
DTC Account Number:___________________
Date__________________________, 1998
All authority herein conferred or agreed to be conferred in this Notice of
Guaranteed Delivery shall survive the death, incapacity or dissolution of the
undersigned and any obligation of the undersigned hereunder shall be binding
upon the heirs, executors, administrators, personal representatives, trustees in
bankruptcy, legal representatives, successors and assigns of the undersigned.
PLEASE SIGN HERE:
_________________________________
(Signature(s) of Owner(s)
or Authorized Signatory)
____________________________, 1998
____________________________, 1998
Area Code and
Telephone number :_________________
<PAGE>
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Must be signed by the holder(s) of the Old Notes exactly as their name(s)
appear(s) on certificate(s) for the Old Notes or on a security position listing,
or by person(s) authorized to become registered holder(s) by endorsements and
documents transmitted with this Notice of Guaranteed Delivery. If signature is
by an attorney-in-fact, executor, administrator, trustee, guardian, officer of a
corporation or other person acting in a fiduciary or representative capacity,
please set forth the signer's full title. Please print name(s) and address(es)
Names:_____________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
Capacity:___________________________________________________________________
Address:____________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
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THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE>
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GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker, municipal securities dealer,
government securities broker or government securities dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association recognized program (each of the foregoing being
referred to as an "Eligible Institution"), hereby guarantees to deliver to the
Exchange Agent, at one of its addresses set forth above, either the Old Notes
tendered hereby in proper form for transfer, or confirmation of the book-entry
transfer of such Old Notes to the Exchange Agent's account at The Depository
Trust Company ("DTC"), pursuant to the procedures for book-entry transfer set
forth in the Prospectus, in either case together with one or more properly
completed and duly executed Letter(s) of Transmittal (or facsimile thereof) and
any other required documents within five business days after the date of
execution of this Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal (or facsimile thereof) and the Old Notes tendered hereby to the
Exchange Agent within the time period set forth above and that failure to do so
could result in a financial loss to the undersigned.
___________________________________ _____________________________________
Name of Firm Authorized Signature
___________________________________ Name:________________________________
Address (Please Type or Print)
___________________________________ Title_________________________________
(Zip Code)
___________________________________ Date:_________________________________
Area code and telephone number
- --------------------------------------------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS NOTICE OF GUARANTEED
DELIVERY. ACTUAL SURRENDER OF OLD NOTES MUST BE MADE PURSUANT TO, AND BE
ACCOMPANIED BY A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL AND
ANY OTHER REQUIRED DOCUMENTS.
<PAGE>
Exhibit 99.3
INSTRUCTIONS TO REGISTERED HOLDER AND/OR BOOK-ENTRY TRANSFER
FACILITY PARTICIPANT FROM BENEFICIAL OWNER
OF
AMSC ACQUISITION COMPANY, INC.
SERIES A 12 1/4% SENIOR NOTES DUE 2008
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus, dated
May __, 1998 (the "Prospectus"), of AMSC Acquisition Company, Inc., a Delaware
corporation (the "Company") and American Mobile Satellite Corporation, a
Delaware corporation and direct parent of the Company ("Holdings") and the
accompanying Letter of Transmittal (the "Letter of Transmittal"), that together
constitute the Company's offer (the "Exchange Offer"). Capitalized terms used
but not defined herein have the meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry
transfer facility participant, as to action to be taken by you relating to the
Exchange Offer with respect to the 12 1/4% Series A Senior Notes due 2008 (the
"Old Notes") held by you for the account of the undersigned.
The aggregate face amount of the Old Notes held by you for the account
of the undersigned is (FILL IN AMOUNT):
$ ___________________ of the 12 1/4% Series A Senior Notes due 2008
With respect to the Exchange Offer, the undersigned hereby instructs
you (CHECK APPROPRIATE BOX):
[_] TO TENDER the following Old Notes held by you for the account of
the undersigned (INSERT PRINCIPAL AMOUNT OF NOTES TO BE TENDERED, IF ANY):
$____________.
[_] NOT TO TENDER any Old Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Old Notes held by you
for the account of the undersigned, it is understood that you are authorized (a)
to make, on behalf of the undersigned (and the undersigned, by its signature
below, hereby makes to you), the representations and warranties contained in the
Letter of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations that (i) the
undersigned is acquiring the Exchange Notes in the
<PAGE>
ordinary course of business of the undersigned, (ii) the undersigned is not
participating, does not participate, and has no arrangement or understanding
with any person to participate in the distribution of the Exchange Notes, (iii)
the undersigned acknowledges that any person participating in the Exchange Offer
for the purpose of distributing the Exchange Notes must comply with the
registration and prospectus delivery requirements of the Securities Act of 1933,
as amended (the "Act"), in connection with a secondary resale transaction of the
Exchange Notes acquired by such person and cannot rely on the position of the
Staff of the Securities and Exchange Commission set forth in no-action letters
that are discussed in the section of the Prospectus entitled "The Exchange
Offer --Resales of the Exchange Notes," and (iv) the undersigned is not an
"affiliate," as defined in Rule 405 under the Act, of the Company; (b) to agree,
on behalf of the undersigned, as set forth in the Letter of Transmittal; and (c)
to take such other action as necessary under the Prospectus or the Letter of
Transmittal to effect the valid tender of such Old Notes.
SIGN HERE
Name of Beneficial
Owner(s):
---------------------------------------------------
Signature(s):
-----------------------------------------------
Names (please
print):
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Address:
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Telephone
Number:
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Taxpayer Identification or Social Security Number:
--------------------
Date:
----------------------
